UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________ 
FORM 10-K
_______________________________ 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20172023

OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File NumberNumber: 000-50245
 ________________________________________
HOPE BANCORP, INC.
(Exact name of registrant as specified in its charter)

Delaware95-4849715
Delaware95-4849715
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
3200 Wilshire Boulevard, Suite 1400,
Los Angeles, California
90010
(Address of principal executive offices)(Zip Code)


3200 Wilshire Boulevard, Suite 1400
Los Angeles, California 90010
(Address of principal executives offices, including zip code)
(213) 639-1700
(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of className of exchange on which registered
Common Stock, par value $0.001 per shareHOPENASDAQ Global Select Market
(Title of class)(Trading Symbol)(Name of exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None

______________________________________________ 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 Yes  x ☒No  o☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  o☐    No  x☒
Indicate by check mark whether the Registrantregistrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrantregistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x☒    No  o☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    xYes  o☒    No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K  x☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerx☒Accelerated filero☐
Non-accelerated filero☐(Do not check if a smaller reporting company)Smaller reporting companyo☐
Emerging growth companyo☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   o☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  o☐   No  x☒
The aggregate market value of the common stock held by non-affiliates of the registrant based upon the closing sale price of the common stock as of the last business day of the registrant’s most recently completed second fiscal quarter, June 30, 2017,2023, as reported on the NASDAQ Global Select Market, was approximately $2,408,992,339.$962,137,772.
Number of shares outstanding of the registrant’s common stock as of February 21, 2018: 135,523,97420, 2024: 120,127,885
Documents Incorporated by Reference: The information required in Part III, Items 10 through 14 areis incorporated herein by reference to the registrant’s definitive proxy statement for the 20182024 annual meeting of stockholders which will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year end.






Hope Bancorp, Inc.

Form 10-K
For the Year Ended December 31, 2023

Table of Contents
Page
Page
Forward-Looking Information
PART I
Item 1.Business
3
PART IGeneral
Item 1.Business
3
Item 1A.Mergers and AcquisitionsRisk Factors
316
Item 1B.Business OverviewUnresolved Staff Comments
424
Lending Activities
4
Investing Activities
6
Deposit Activities
6
Borrowing Activities
6
Market Area and Competition
7
Economic Conditions, Government Policies and Legislation
7
Supervision and Regulation
7
Employees
13
Item 1A.1C.Risk FactorsCybersecurity
1424
Item 1B.2.Unresolved Staff CommentsProperties
2226
Item 2.3.PropertiesLegal Proceedings
2226
Item 3.4.Legal ProceedingsMine Safety Disclosures
2226
Item 4.Mine Safety Disclosures
22
PART II
PART II
Item 5.


Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
2327
Item 6.Selected Financial Data[RESERVED]
2527
Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations
2728
Item 7A.Quantitative and Qualitative Disclosures about Market Risk
5663
Item 8.Financial Statements and Supplementary Data
5866
Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
5866
Item 9A.Controls and Procedures
5967
Item 9B.Other Information
6268
Item 9C.Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
68
PART III
Item 10.Directors, Executive Officers and Corporate Governance
6369
Item 11.Executive Compensation
6369
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
6369
Item 13.Certain Relationships and Related Transactions, and Director Independence
6369
Item 14.Principal Accountant Fees and Services
6369
PART IV
Item 15.Exhibits and Financial Statement Schedules
6470
Item 16.Form 10-K Summary
6673
SIGNATURES
74




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Forward-Looking Information
Certain statements in this Annual Report on Form 10-K may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).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,“projects,” “may”“forecasts,” “estimates” or similar expressions. With respect to any such forward-looking statements, Hope Bancorp, Inc.the Company claims the protection provided for in the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, trends, uncertainties, and uncertainties. Ourfactors that are beyond the Company’s control or ability to predict. 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: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; and regulatory risks associated with current and future regulations. For a more detailed discussion ofadditional information concerning these and other risk factors, that might cause such a difference, see Part I, Item 1A, “Risk Factors”1A. Risk Factors herein. Hope Bancorp, Inc.The Company does not undertake, and specifically disclaims any obligation, to update any forward lookingforward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.



PART I
Item 1.BUSINESS

General
Hope Bancorp, Inc. (“Hope Bancorp” on a parent-only basis, and the “Company,” “we” or “our” on a consolidated basis with the Bank)Bank of Hope) is a bank holding company headquartered in Los Angeles, California. The CompanyHope Bancorp was incorporated in Delaware in the year 2000. Previously known as BBCN Bancorp Inc., the Company changed its name to Hope Bancorp at the time of the merger with Wilshire Bancorp Inc. (“Wilshire”) on July 29, 2016. We offer commercial and retail banking loan and deposit products through our wholly-owned subsidiary, Bank of Hope, (formerly BBCN Bank), a California state-chartered bank (the “Bank” or “Bank of Hope”). BankFrom our roots as a Korean-American focused bank, we have grown to be one of Hope primarily focuses its businessthe largest independent commercial banks headquartered in ethnic communitiesCalifornia and serve a multi-ethnic population of customers around the United States. Our network of branches and loan production offices includes locations in California, New York, Texas, Washington, Illinois, New Jersey, Virginia, Georgia, Florida, Alabama, Colorado, and New York City, Chicago, Houston, Dallas, SeattleOregon and Washington, D.C. metropolitan areas.includes a representative office in Seoul, South Korea. Our headquarters are located at 3200 Wilshire Boulevard, Suite 1400, Los Angeles, California 90010, and our telephone number at that address is (213) 639-1700.
Hope Bancorp exists primarily for the purpose of holding the stock of the Bank and other subsidiaries it may acquire or establish. Bank of Hope’s deposits are insured by the Federal Deposit Insurance Corporation (the “FDIC”), up to applicable limits.
We file reports with the Securities and Exchange Commission (the “SEC”), which include annual reports on Form10-K,Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, as well as proxy and information statements in connection with our stockholdersstockholders’ meetings. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC, 20549. The SEC maintains a website that contains the reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of the website is www.sec.gov. Our website address is www.bankofhope.com. Electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other information and reports we file with the SEC and amendments to those reports, are available free of charge by visiting the Investor Relations section of our website. These reports are generally posted as soon as reasonably practicable after they are electronically filed with the SEC. None of the information on or hyperlinked from the Company’s website is incorporated into this Annual Report on Form 10-K.
Mergers and Acquisitions
On July 29, 2016, we completed the acquisition of Wilshire, previously headquartered in Los Angeles, California. With the completion of the acquisition, 35 branches in California, New York, New Jersey, Texas, Alabama, and Georgia were added to our existing branch network in addition to six loan production offices. Some of these branch locations and loan production offices were subsequently closed as part of our consolidation plan. Our current consolidated network consists of 63 branches and eight loan production offices.
The Wilshire acquisition was accounted for in accordance with Accounting Standard Codification (“ASC”) 805 “Business Combinations,” and the assets and liabilities of Wilshire were recorded at fair value at the date of acquisition. The fair value of assets acquired from Wilshire totaled approximately $4.63 billion and goodwill recorded from acquisitions consummated in 2016 totaled $359.0 million.
On January 23, 2017, we announced the signing of a definitive agreement and plan of merger with U & I Financial Corporation (“U & I”) pursuant to which U & I would have merged with and into Hope Bancorp with Hope Bancorp as the surviving corporation. As part of the merger, UniBank, a wholly-owned subsidiary of U & I, would have merged with and into the Bank. Subsequently

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on September 15, 2017, we announced the termination of the proposed merger with U & I as required regulatory approval had not been obtained. The Mutual Termination Agreement provided, among other things, that each party will bear its own costs and expenses in connection with the terminated transaction, without penalties or termination fees. In connection with the termination, the parties have provided mutual releases to one another relating to the merger transaction.
Business Overview
Our principal business activities are conducted through the Bank and primarily consist of earning interest on loans and investment securities, thatwhich are primarily funded by customer deposits and other borrowings. Operating revenues consist of the difference between interest received and interest paid, gains and losses on the sale of financial assets, and fees earned for financial services provided to our customers. Interest rates are highly sensitive to many factors that are beyond our control, such as general economic conditions, new legislation and the policies of various governmental and regulatory authorities. Although our business may vary with local and national economic conditions, such variations are not generally seasonal in nature.
Through our current networkWe offer a full suite of 63 branchescommercial, corporate and eightconsumer loan, production offices, we offer core business bankingdeposit and fee-based products for small and medium-sized businesses and individuals. We accept deposits and originate a variety of loans,services, including commercial business loans,and commercial real estate loans, trade finance loans,lending, Small Business Administration (“SBA”) loans, auto loans, single-family mortgages, warehouse lines of credit, personal loans,lending, residential mortgage and credit cards. We offer cashother consumer lending, treasury management services, to our business customers, which include remote deposit capture, lock box and ACH origination services. We offer comprehensive investment and wealth management services to high-net-worth clients. We also offer a mobile banking application for smartphones that extends banking services, such as mobile deposits and bill payment, for our customers at all times. In an effort to better meet our customers’ needs, our mini-market branches generally offer hours from 9 a.m. to 6 p.m. Most of our branches offer 24-hour automated teller machines (“ATMs”). We also offer debit card services with a rewards program to all customers. In addition, most of our branches offer foreign exchanges services, safe deposit boxescurrency exchange solutions, interest rate risk hedging products, and other customary bank services.and international trade financing, among others. Our website at www.bankofhope.com offers internet banking services and applications in both English and Korean.
Lending Activities
Commercial Businessand Industrial Loans
We provide commercial and industrial (“C&I”) loans to businessessmall business, middle market, corporate and institutional borrowers through the Company’s branch network, loan production offices, and specialized industry lending teams. These C&I loans are provided for various purposes such as for working capital, purchasing inventory, debt refinancing, business acquisitions, and other business relatedbusiness-related financing needs. CommercialC&I loans are typically classified as (1) short-term loans (or lines of credit) or (2) long-term loans (or term loans to businesses). Short-term loans are often used to finance business working capital needs, collateralized with current assets, such as inventory and accounts receivable and typically have terms of one year with interest paid monthly on the outstanding balance andwith the principal balance due at maturity. Long-term loans typically have terms of fivethree to sevenfive years with principal and interest paid monthly. The credit worthiness of our borrowers is determinedevaluated before a loan is originated through financial spread and is periodically reviewedcollateral analysis and, if large enough, with financial projections to ascertain whether credit quality changes have occurred. Commercial business loans are typically collateralized by the borrower’s business assets and/or real estate.
Our commercial business loan portfolio includes trade finance loans from our Corporate Banking Center, which generally serves businesses involved in international trade activities. These loans are typically collateralized by business assetscover both base and downside case cash flow scenarios; and are usedlargely reviewed quarterly to meet the short-term working capital needs (accounts receivable and inventory financing) of our borrowers. Our International Operations Department issues and advises on letters of credit for export and import businesses. The underwriting procedure for this type of credit is the same as for commercial business loans. We offer the following types of letters of credit to customers:
Commercial: An undertaking by the issuing bank to pay for a commercial transaction.
Standby: An undertaking by the issuing bank to pay for the non-performance of the applicant customer.
Revocable: Letter of credit that can be modified or cancelled by the issuing bank at any time with notice to the beneficiary (does not provide the beneficiary with a firm promise of payment).
Irrevocable: Letter of credit that cannot be altered or cancelled without mutual consent of all parties.
Sight: Letter of credit requiring payment upon presentation of conforming shipping documents.
Usance: Letter of credit that allows the buyer to delay payment up to a designated number of days after presentation of shipping documents.
Import: Letter of credit issued to assist customers in purchasing goods from overseas.
Export: Letter of credit issued to assist customers in selling goods overseas.
Transferable: Letter of credit that allows the beneficiary to transfer its drawing (payment) rights, in part or full, to another.
Non-transferable: Letter of credit that does not allow the beneficiary to transfer their right, in part or full, to another.

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Our trade finance services include the issuance and negotiation of letters of credit,address potential borrower covenant defaults/appropriate borrower action plans as well as loan risk grading. We seek to establish full banking relationships for all our commercial customers that include all of the handling of documentary collections. On the export side, we provide adviceBank’s financing, deposit and negotiation of commercial letters of creditfee-based products and we transfer and issue back-to-back letters of credit.services. We also provide importers with trade finance lines of credit, which allow foroffer C&I loans under the issuance of commercial letters of creditSBA 504, SBA 7(a) and the financing of documents received under such letters of credit, as well as documents received under documentary collections. Exporters are assisted through export lines of credit as well as through immediate financing of clean documents presented under export letters of credit.
We provide commercial equipment lease financing through a relationship with a third-party leasing company. Equipment leasing loans are generally capital leases with maturities up to five years.
We also provide warehouse lines of credit to mortgage loan originators. The lines of credit are used by these originators to fund mortgagesSBA Express Loan (“EZ”) programs which are then pledged to the Bank as collateral until the mortgage loans are sold and the lines of credit are paid down. The typical duration of these lines of credit from the time of funding to pay-down ranges from 10-30 days. Although collateralized by mortgage loans, the structure of warehouse lending agreements resultsdescribed in more detail in the commercial and industrial loan treatment for these types of loans.subsequent paragraph.

4


Commercial Real Estate Loans
RealCommercial real estate (“CRE”) loans cover a broad array of commercial real estate segments including retail, industrial, multi-family, gas stations & car washes, mixed-use facilities, hotels/motels, office and other. CRE loans are extended for the purchase and refinance of commercial real estate and are generally secured by first deeds of trust. The maturities on the majority of such loans are generally five to seven years with a 25-year principal amortization schedule and a balloon payment due at maturity. We offer both fixed and floating rate commercial real estate loans.CRE loans in addition to offering clients interest rate hedging options. It is our general policy to restrict commercial real estateCRE loan amounts to no more than 75% of the appraised value of the property at the date of origination.
We also originate loans to finance CRE construction projects including one-to-four family residences, multifamily residences, senior housing, and commercial projects. Residential construction loans are due upon the sale of the completed project and are generally collateralized by first liens on the real estate and have floating interest rates. Construction loans are considered to have higher risks than other loans due to the ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, and the availability of long-term financing. Economic conditions may also impact our ability to recover its investment in construction loans. Adverse economic conditions may negatively impact the real estate market, which could affect the borrowers’ ability to complete and sell the project. Additionally, the fair value of the underlying collateral may fluctuate as market conditions change. As construction loans make up only a small percentage of the total loan portfolio, these loans are not further broken down into classes.
Small Business Administration Loans
We extend loans partially guaranteed by the SBA. We primarily extend SBA loans known as SBA 7(a) loans, SBA 504 loans and SBA 504EZ loans. SBA 7(a) loans are typically extended for working capital needs, purchase of inventory, purchase of machinery and equipment, debt refinance, business acquisitions, start-up financing, or to purchase or construct owner-occupied commercial property. SBA 7(a) loans are typically term loans with maturities up to 10 years for loans not secured by real estate and up to 25 years for real estate secured loans. SBA loans are fully amortizing with monthly payments of principal and interest. SBA 7(a) loans are typically floating rate loans that are secured by business assets and/or real estate. Depending on the loan amount, each loan is typically guaranteed 75% to 85% by the SBA, with a maximum gross loan amount to any one small business borrower of $5.0 million and a maximum SBA guaranteed amount of $3.75 million.
We are generally able to sell the guaranteed portion of the SBA 7(a) loans in the secondary market at a premium while earning servicing fee income on the sold portion over the remaining life of the loan. In addition to the interest yield earned on the unguaranteed portion of the SBA 7(a) loans that are not sold, we hope tocan recognize income from gains on sales and from loan servicing on the SBA 7(a) loans that are sold. During the second half of 2023, we elected to retain our SBA 7(a) loan production on our balance sheet and did not record any gain on sale of SBA loans. Due lower premium rates paid in the secondary market, it was more economic to retain the production on balance sheet and earn interest income on the full production amount.
SBA 504 loans are typically extended for the purpose of purchasing owner-occupied commercial real estate or long-term capital equipment. SBA 504 loans are typically extended for up to 20 years or the life of the asset being financed. SBA 504 loans are financed as a participation loan between the Bank and the SBA through a Certified Development Company (“CDC”). Generally, the loans are structured to give the Bank a 50% first deed of trust (“TD”), the CDC a 40% second TD, and the remaining 10% is funded by the borrower. Interest rates for first TD Bank loans are subject to normal bank commercial rates and terms, and the second TD CDC loans are fixed for the life of the loans based on certain indices.

SBA EZ loans are C&I loans that are unsecured term loans extended for business purposes. These loans are below $500 thousand and are processed based on the Company’s credit scoring program.
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Our SBA loans are originated through our SBA loan department, our SBA loan production offices, or referred through our branch network. All of our SBA loans are originated through our SBA Loan Departments.loan departments and certain loan production offices. The SBA Loan Departmentsloan departments are staffed by loan officers who provide assistance to qualified businesses. The Bank has been designated as an SBA Preferred Lender, which is the highest designation awarded by the SBA. This designation generally facilitates a more efficient marketing and approval process for SBA loans. We have attained SBA Preferred Lender status nationwide.
Consumer and Other Loans
Our consumer loans primarily consist of auto loans,single-family mortgages; we also offer home equity, credit card loans, and personal loans. Our single-family mortgages and signature loans, with a majority of our consumer loan portfolio currently consisting of single-family mortgagesare secured by a first deed of trust on single family residences under a variety of loan products including fixed-rate and adjustable-rate mortgages with either 30-year or 15-year terms. Adjustable rate mortgage loans are also offered with flexible initial and periodic adjustments ranging from five to seven years.
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Investing Activities
The main objective of our investment strategyportfolio is to provide a source of on-balance sheet liquidity while providing a means to manage our interest rate risk, and to generategenerating an adequate level of interest income without taking undue risks. Subject to various restrictions, our investment policy permits investment in various types of securities, certificates of deposit (“CDs”), and federal funds sold. Our investments include equity investments, and available for sale and held to maturity investment portfolio has consistedportfolios, which consist of U.S. Treasury securities, government sponsored agency bonds, mortgage-backed securities, collateralized mortgage obligations (“CMOs”), trust preferredasset-backed securities, corporate securities, and municipal securities, and mutual funds.securities. For a detailed breakdown of our investment portfolio,investments, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition – Investment SecuritySecurities Portfolio.”
Our securities are classified for accounting purposes as equity investments, investments available for sale. We do not maintain held-to-maturitysale (“AFS”) or trading portfolios.investments held to maturity (“HTM”). Securities purchased to meet investment-related objectives, such as liquidity management or interest rate risk, and which may be sold as necessary to implement management strategies, are designated as available for saleAFS at the time of purchase. Investment securities that the Bank has the positive intent and ability to hold to maturity are designated as investments HTM.
Deposit Activities
We attract both short-term and long-term deposits from the general public by offering a wide range of deposit products and services. Through our branch network, we provide our banking customers with personal and business checking accounts, money market accounts, savings accounts, time deposit accounts, individual retirement accounts, 24-hour ATMs, internet banking and bill-pay, remote deposit capture, lock boxes, and ACH origination services. In addition to our retailconsumer and commercial deposits, we obtain both secured and unsecured wholesale deposits, including public deposits such as State of California Treasurer’s time deposits; brokered demand deposits, brokered money market, and time deposits, andas well as deposits gathered from outside of the Bank’s normal market area through deposit listing services.services and our online banking platform.
FDIC-insured deposits are our primary source of funds. As part of our asset-liability management, we analyze our retailcustomer and wholesale deposit maturities and interest rates to monitor and manage our cost of funds, to the extent feasible in the context of changing market conditions, as well as to promote stability in our supply of funds. For additional information on deposits, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition – Deposits.”
Borrowing Activities
When we have more funds than required for our reserve requirements or short-term liquidity needs, we may sell federal funds to other financial institutions. Conversely, when we have less funds than required, we may borrow funds from the Federal Home Loan Bank of San Francisco (the “FHLB”), the Federal Reserve Bank of San Francisco (“the Federal Reserve Bank”), or from our correspondent banking relationships. In addition, we may borrow from the FHLB on a longer term basis to provide funding for certain loan or investment securities strategies, as well as asset-liability management strategies.
The FHLB functions in a reserve credit capacity for qualifying financial institutions. As a member, we are required to own capital stock in the FHLB and may apply for advances from the FHLB on an unsecured basis or by utilizing qualifying loans and certain securities as collateral. The FHLB offers a full range of borrowing programs on its advances, with terms ranging from one day to thirty years, at competitive market rates. A prepayment penalty is usually imposed for early repayment of these advances. Information concerning FHLB advances and other borrowings is included in Note 89 of “Notesour Notes to Consolidated Financial Statements.”
We may also borrow from the Federal Reserve Bank.Bank’s discount window and Bank Term Funding Program (“BTFP”). The maximum amount that we may borrow from the Federal Reserve Bank’s discount window is up to 95%99% of the outstanding principal balanceestimated fair value of the qualifying loans and the fair value of the securities that we pledge. The BTFP, which was introduced in March 2023 and will cease making new advances in March 2024, allows institutions to pledge certain securities at par value and borrow at a rate no lower than the interest rate on reserve balances in effect on the day the loan is made.

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Long-Term Debt
At December 31, 2023, we had nine wholly-owned subsidiary grantor trusts (“Trusts”) that have issued $126.0 million of pooled trust preferred securities (“Trust Preferred Securities”). The Trust Preferred Securities accrue and pay distributions periodically at specified annual rates as provided in the related indentures for the securities. The Trusts used the net proceeds from the offering of the Trust Preferred Securities to purchase a like amount of subordinated debentures of Hope Bancorp (the “Debentures”). The Debentures are the sole assets of the trusts. Our obligations under the Debentures and related documents, taken together, constitute a full and unconditional guarantee by us of the obligations of the Trusts. The Trust Preferred Securities are mandatorily redeemable upon the maturity of the Debentures (which have maturity dates ranging from 2033 to 2037), or upon earlier redemption as provided in the indentures. We have the right to redeem the Debentures in whole (but not in part) on a quarterly basis at a specified redemption price. We also have the right to defer interest on the Debentures for up to five years.
In 2018, we issued $217.5 million aggregate principal amount of 2.00% convertible senior notes maturing on May 15, 2038, in a private offering to investors. The convertible notes were issued as part of our plan to repurchase shares of our common stock. On May 15, 2023, most holders of our convertible notes exercised their right to put their notes and therefore we paid off $197.1 million of convertible note principal in cash. In addition, we repurchased our notes in the aggregate principal amount of $19.9 million in 2023, and the repurchased notes were immediately cancelled subsequent to repurchase. The remaining net carrying balance of convertible notes at December 31, 2023, was $444 thousand.
Market Area and Competition
We currently have 63 banking officesAs of December 31, 2023, we had 54 branches in areas having high concentrations of Korean Americans, of which 35 arethe United States, predominantly in multi-ethnic communities. Of these, 29 were located in the Los Angeles, Orange County, Oakland and Silicon Valley (Santa Clara County) areas of California, 10 arenine were located in the New York City metropolitan area and New Jersey, six areJersey; four were in the Chicago metropolitan area,Illinois; four arewere in the Seattle metropolitan area,Texas; two were in Virginia; four arewere in Texas, two are in Virginia,Washington; one iswas in Alabama, and one iswas in Georgia. We also have eighthad nine loan production offices located in Dallas, Seattle, Atlanta, Denver, Portland, Fremont, Newport Beach,California, Colorado, Florida, Georgia, Oregon, Texas, and Laguna Niguel. Washington, as well as a representative office in Seoul, South Korea.
The banking and financial services industry generally, and in our market areas specifically, is highly competitive. The increasingly competitive environment is a result primarily of strong competition among the banks servicing the Korean-American community, regional and national banks; changes in regulation,regulations; changes in technology and product delivery systems, andas well as consolidation among financial services companies. In addition, federal legislation may have the effect of further increasing the pace of consolidation within the financial services industry. See “Supervision and Regulation.”
We compete for loans, deposits, and customers with other commercial banks, savings and loan associations, securities and brokerage companies, mortgage companies, insurance companies, marketplace finance platforms, money market funds, credit unions, and other non-bank financial service providers. Many of these competitors are much larger in total assets and capitalization, have greater access to capital markets, are more widely recognized, have broader geographic scope, and offer a broader range of financial services than we do.
Economic Conditions, Government Policies and Legislation
Our profitability, like that of most financialdepository institutions, depends, among other things, on interest rate differentials. In general, the difference between the interest expense on interest bearing liabilities, such as deposits, and borrowings, or debt, and the interest income on our interest earning assets, such as loans we extend to our customers, and securities held in our investment portfolio, and interest earning cash, as well as the level of noninterest bearing deposits, havehas a significant impact on our profitability. Interest rates are highly sensitive to many factors that are beyond our control, such as the economy, inflation, unemployment, consumer spending, and political changes and events. The impact that future changes in domestic and foreign economic and political conditions might have on our performance cannot be predicted.
Our business is also influenced by the monetary and fiscal policies of the federal government and the policies of regulatory agencies, particularly the Board of Governors of the Federal Reserve System (the “FRB”). The FRB implements national monetary policies (with objectives such as curbing inflation or preventing recession) through its open-market operations in U.S. government securities, by adjusting the required level of reserves for depository institutions subject to its reserve requirements, and by varying the targeted federal funds and discount rates applicable to borrowings by depository institutions. The actions of the FRB in these areas influence the growth of bank loans, investments, and deposits and also affect interest rates earned on interest earning assets and paid on interest bearing liabilities. The nature and impact on Hope Bancorp, and the Bank, of future changes in monetary and fiscal policies cannot be predicted.
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From time to time, legislation and regulations are enacted or adopted which have the effect of increasing the cost of doing business, limiting or expanding permissible activities, or affecting the competitive balance between banks and other financial services providers. Proposals to change the laws and regulations governing the operations and taxation of banks, bank holding companies, financial holding companies, and other financial institutions and financial services providers are frequently made in the U.S. Congress, in state legislatures, and by various regulatory agencies. These proposals may result in changes in banking statutes and regulations and our operating environment in substantial and unpredictable ways. If enacted, such legislation could increase the cost of doing business, limit permissible activities, restrict our growth or expansionary activities, or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions. We cannot predict whether any of thissuch potential legislation will be enacted, and if enacted, the effect that it, or any implementing regulations, would have on our financial condition or results of operations. See “Supervision and Regulation.”
Supervision and Regulation
General
The Company is registered withHope Bancorp and the Bank are subject to examination by the FRB as a bank holding companyextensive regulation and is also subject to certain provisions of the California Financial Code as applicable to bank holding companies. As a California state-chartered bank whose accounts are insured by the FDIC, the Bank is subject to regulation, supervision under state and regular examination by the California Department of Business Oversight (the “DBO”) and the FDIC. Such supervision and regulationfederal banking laws. This regulatory framework covers substantially all of the business activities of Hope Bancorp and the Bank, including, among others,Bank. In the exercise of their regulatory and supervisory authority, the bank regulatory agencies have emphasized capital standards, general investment authority, deposit takingplanning and borrowing authority, mergers, establishment of branch offices,stress testing, liquidity management, enterprise risk management, corporate governance, anti-money laundering compliance, information technology adequacy, cybersecurity preparedness, vendor management, and permitted subsidiary investmentsfair lending and activities. In addition, while the Bank is not a member of the FRB, the Bank is subject to certain regulations of the FRB.other consumer compliance obligations. The federal and state regulatory systems are intended primarily for the protection of depositors, customers, the FDIC deposit insurance fund (the “DIF”) and the banking system as a whole, rather than for the protection of shareholdersour stockholders or other investors.

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In the exercise of their supervisory and examination authority, the regulatory agencies have recently emphasized corporate governance; capital planning and stress testing; liquidity management; enterprise risk management and other board responsibilities; anti-money laundering compliance; information technology adequacy; cyber security preparedness; vendor management; fair lending; and other consumer compliance obligations.
The following summarizesummarizes certain banking laws and regulations that apply to Hope Bancorp and the Bank. These descriptions of statutes and regulations and their possible effects do not purport to be complete descriptions of all of the provisions of those statutes and regulations and their possible effects on us, nor do they purport to identify every statute and regulation that may apply to us.
LegislationBank Holding Company Regulation
Hope Bancorp is a registered bank holding company under the Bank Holding Company Act. As a bank holding company, Hope Bancorp is subject to regulation, supervision and Regulatory Developmentsregular examination by the FRB and is required to file periodic reports of its operations with the FRB and other such reports as the FRB may require.
Bank holding companies are required to maintain certain levels of capital (See “Capital Adequacy Requirements”) and must serve as a source of financial and managerial strength to subsidiary banks and commit resources as necessary to support each subsidiary bank. FRB regulations and polices limit the dividends a bank holding company may pay to its stockholders and the amount of its shares that it may repurchase (See “Dividends and Stock Repurchases”). FRB rules and policies also regulate provisions of certain bank holding company debt and the FRB may impose interest ceilings and reserve requirements on such debt and require prior approval to purchase or redeem debt securities in certain situations.
The federal banking agencies continueFRB may require a bank holding company to implementterminate an activity or terminate control of or liquidate or divest certain subsidiaries, affiliates or investments if the remaining requirements inFRB believes the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) as well as promulgating other regulations and guidelines intendedactivity or the control of the subsidiary or affiliate constitutes a significant risk to assure the financial strength and safety, and soundness of banks and theor stability of any bank subsidiary. Under certain circumstances, the U.S.FRB could, for example, prohibit Hope Bancorp from paying dividends or repurchasing its common stock on the basis that doing would be an unsafe or unsound banking system. For example, followingpractice.
The activities in which a bank holding company may engage are limited to those activities determined by the initial effectivenessFRB to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Bank holding companies that elect and retain “financial holding company” status pursuant to the Gramm-Leach-Bliley Act of new capital rules1999 (the “New Capital Rules”“GLBA”) may also engage in 2015, the phase-inbroader securities, insurance, merchant banking and other activities that are determined to be “financial in nature” or are incidental or complementary to activities that are financial in nature. To elect and retain financial holding company status, a bank holding company and all depository institution subsidiaries of a new “capital conservation buffer”bank holding company must be considered well capitalized and meet certain other requirements. Hope Bancorp has not elected financial holding company status and neither Hope Bancorp nor the Bank has engaged in any activities determined by the FRB to be financial in nature or incidental or complementary to activities that are financial in nature.
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A bank holding company must seek approval from the FRB prior to acquiring all or substantially all of 2.5%the assets of any bank or bank holding company or the ownership or control of voting shares of any bank or bank holding company if, after giving effect to such acquisition, it would own or control, directly or indirectly, more than 5 percent of a bank. Under the Bank Merger Act, the prior approval of the FDIC is required for minimum risk-weighted asset ratios under the New Capital Rules began on January 1, 2016 at 0.625%Bank to merge with another bank or purchase all or substantially all of the assets or assume any of the deposits of another FDIC-insured depository institution. Federal banking regulators review competition, management, financial, compliance and increased to 1.25% on January 1, 2017other factors when considering applications for these approvals. Similar California or other state banking agency approvals may also be required.
The Company is also a bank holding company within the meaning of Section 3700 of the California Financial Code. Therefore, the Company and 1.875% on January 1, 2018. See “Capital Adequacy” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
Our assets exceed $10 billion and, as a result, weits subsidiaries are subject to additional regulationexamination by, and supervision applicable to banking organizations with more than $10 billion in assets, such as the following:
We aremay be required to complyfile reports with, certain provisionsthe California Department of Financial Protection and Innovation (the “DFPI”). DFPI approvals are also required for bank mergers and acquisitions.
Bank Regulation
The Bank is a California state-chartered bank whose deposit accounts are insured by the FRB’s Enhanced Prudential Standards that impose a variety of requirements regarding risk management and governance. These standards require, for example, that we establish a board-level risk committee.
We areFDIC, up to applicable limits. As such, the Bank is subject to periodicregulation, supervision and regular examination by the DFPI and the FDIC. The Bank is also subject to regulation, supervision and examination by the Consumer Finance Protection Bureau (“CFPB”) with respect to federal consumer financial laws. While the Bank is not a member of the FRB, the Bank is also subject to certain regulations of the FRB.
Federal and state laws and regulations applicable to banks regulate, among other things, the scope of their business, their investments, their reserves against deposits, lending activities, servicing and foreclosing on loans, borrowings, capital requirements, certain check-clearing activities, dividends, branching, and mergers and acquisitions. California banks are also subject to statutes and regulations including FRB Regulation O, Federal Reserve Act Sections 23A and 23B and Regulation W, which restrict or limit loans or extensions of credit to “insiders”, including officers, directors, and principal stockholders, and loans or extension of credit by banks to affiliates or purchases of assets from affiliates, including parent bank holding companies, except pursuant to certain exceptions and only on terms and conditions at least as favorable to those prevailing for comparable transactions with unaffiliated parties. The Dodd-Frank Wall Street Reform and Consumer Protection Action (the “Dodd-Frank Act”) expanded definitions and restrictions on transactions with affiliates and insiders under Sections 23A and 23B and also lending limits for derivative transactions, repurchase agreements, and securities lending and borrowing transactions.
Under the Federal Deposit Insurance Act (“FDI Act”) and the California Financial Code, California state chartered commercial banks may generally engage in any activity permissible for national banks. Therefore, the Bank may form subsidiaries to engage in the many so-called “closely related to banking” or “nonbanking” activities commonly conducted by national banks in operating subsidiaries or by subsidiaries of bank holding companies. Further, California state chartered banks may conduct certain financial activities permitted under GLBA in a “financial subsidiary” to the same extent as a national bank, provided the bank is and remains well-capitalized, well-managed and in satisfactory compliance with federal consumer laws. Although we were previously subject to regulations issued by the CFPB, the Bank’s primary federal regulatory, the FDIC, had responsibility for our consumer compliance exams. See “Consumer Finance Protection Bureau.”Community Reinvestment Act (the “CRA”). The Bank currently conducts no non-banking or financial activities through subsidiaries.
We have to comply with the annual stress testing requirements mandated by the Dodd-Frank Act.
Capital Adequacy RequirementsBank Holding Company Regulation
Hope Bancorp is a registered bank holding company under the Bank Holding Company Act. As a bank holding company, Hope Bancorp is subject to regulation, supervision and regular examination by the FRB and is required to file periodic reports of its operations with the FRB and other such reports as the FRB may require.
Bank holding companies are required to maintain certain levels of capital (See “Capital Adequacy Requirements”) and must serve as a source of financial and managerial strength to subsidiary banks and commit resources as necessary to support each subsidiary bank. FRB regulations and polices limit the dividends a bank holding company may pay to its stockholders and the amount of its shares that it may repurchase (See “Dividends and Stock Repurchases”). FRB rules and policies also regulate provisions of certain bank holding company debt and the FRB may impose interest ceilings and reserve requirements on such debt and require prior approval to purchase or redeem debt securities in certain situations.
The FRB may require a bank holding company to terminate an activity or terminate control of or liquidate or divest certain subsidiaries, affiliates or investments if the FRB believes the activity or the control of the subsidiary or affiliate constitutes a significant risk to the financial safety, soundness or stability of any bank subsidiary. Under certain circumstances, the FRB could, for example, prohibit Hope Bancorp from paying dividends or repurchasing its common stock on the basis that doing would be an unsafe or unsound banking practice.
The activities in which a bank holding company may engage are limited to those activities determined by the FRB to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Bank holding companies that elect and retain “financial holding company” status pursuant to the Gramm-Leach-Bliley Act of 1999 (the “GLBA”) may also engage in broader securities, insurance, merchant banking and other activities that are determined to be “financial in nature” or are incidental or complementary to activities that are financial in nature. To elect and retain financial holding company status, a bank holding company and all depository institution subsidiaries of a bank holding company must be considered well capitalized and meet certain other requirements. Hope Bancorp has not elected financial holding company status and neither Hope Bancorp nor the Bank has engaged in any activities determined by the FRB to be financial in nature or incidental or complementary to activities that are financial in nature.
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A bank holding company must seek approval from the FRB prior to acquiring all or substantially all of the assets of any bank or bank holding company or the ownership or control of voting shares of any bank or bank holding company if, after giving effect to such acquisition, it would own or control, directly or indirectly, more than 5 percent of a bank. Under the Bank Merger Act, the prior approval of the FDIC is required for the Bank to merge with another bank or purchase all or substantially all of the assets or assume any of the deposits of another FDIC-insured depository institution. Federal banking regulators review competition, management, financial, compliance and other factors when considering applications for these approvals. Similar California or other state banking agency approvals may also be required.
The Company is also a bank holding company within the meaning of Section 3700 of the California Financial Code. Therefore, the Company and its subsidiaries are subject to similar regulatoryexamination by, and may be required to file reports with, the California Department of Financial Protection and Innovation (the “DFPI”). DFPI approvals are also required for bank mergers and acquisitions.
Bank Regulation
The Bank is a California state-chartered bank whose deposit accounts are insured by the FDIC, up to applicable limits. As such, the Bank is subject to regulation, supervision and regular examination by the DFPI and the FDIC. The Bank is also subject to regulation, supervision and examination by the Consumer Finance Protection Bureau (“CFPB”) with respect to federal consumer financial laws. While the Bank is not a member of the FRB, the Bank is also subject to certain regulations of the FRB.
Federal and state laws and regulations applicable to banks regulate, among other things, the scope of their business, their investments, their reserves against deposits, lending activities, servicing and foreclosing on loans, borrowings, capital requirements, administered by their statecertain check-clearing activities, dividends, branching, and federal supervisory banking agencies. The basic capital rule changes in the New Capital Rules adopted by the federal bank regulatory agencies were fully effective on January 1, 2015, but many elements are being phased in over multiple years. The risk-based capital guidelines for bank holding companiesmergers and acquisitions. California banks and additionally for banks, prompt corrective action regulations (see “Prompt Corrective Action Provisions”), require banking organizations to maintain capital ratios that vary based on the perceived degree of risk associated with a banking organization’s operations for both transactions reported on the balance sheet as assets, such as loans, and those recorded as off-balance sheet items, such as commitments, letters of credit, and recourse arrangements. The risk-based capital ratios are determined by classifying assets and certain off-balance sheet financial instruments into weighted categories, with higher levels of capital being required for those categories perceived as representing greater risks, and dividing qualifying capital by total risk-adjusted assets and off-balance sheet items. Capital amounts and classifications are also subject to qualitative judgmentsstatutes and regulations including FRB Regulation O, Federal Reserve Act Sections 23A and 23B and Regulation W, which restrict or limit loans or extensions of credit to “insiders”, including officers, directors, and principal stockholders, and loans or extension of credit by regulators about components, risk weighting, and other factors. Bankbanks to affiliates or purchases of assets from affiliates, including parent bank holding companies, except pursuant to certain exceptions and banks engaged in significant trading activity may also be subject to the market risk capital guidelinesonly on terms and be required to incorporate additional market and interest rate risk components into their risk-based capital standards. To the extent that the new rules are not fully phased in, the prior capital rules continue to apply.
The New Capital Rules revised the previous risk-based and leverage capital requirements for banking organizations to meet requirements of the Dodd-Frank Act and to implement the international Basel Committee on Banking Supervision Basel III agreements. Many of the requirements in the New Capital Rules and other regulations and rules apply only to larger or internationally active institutions and those with $10 billion of assets. For example, banking organizations with more than $10 billion in assets are subject to the Dodd Frank Act’s requirements for annual stress tests and the Enhanced Prudential Standards, both of which apply to the Company and the Bank now that we have crossed the $10 billion asset threshold. Other requirements will apply, such as Comprehensive Capital Analysis and Review requirements; capital plan and Resolution Plan or living will submissions; an additional countercyclical capital buffer; and a supplementary leverage ratio.

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Under the risk-based capital guidelines in place prior to the effectiveness of the New Capital Rules, which trace back to the 1988 Basel I accord, there were three fundamental capital ratios: a total risk-based capital ratio, a Tier 1 risk-based capital ratio and a Tier 1 leverage ratio. To generally be deemed “well capitalized” for bank regulatory purposes a bank must have a total risk-based capital ratio, a Tier 1 risk-based capital ratio and a Tier 1 leverage ratio ofconditions at least ten percent, six percentas favorable to those prevailing for comparable transactions with unaffiliated parties. The Dodd-Frank Wall Street Reform and five percent, respectively. Consumer Protection Action (the “Dodd-Frank Act”) expanded definitions and restrictions on transactions with affiliates and insiders under Sections 23A and 23B and also lending limits for derivative transactions, repurchase agreements, and securities lending and borrowing transactions.
Under the prior capital rules there was no Tier 1 leverage requirement for a holding company to be deemed well-capitalized.
The following are the New Capital Rules applicable to the Hope Bancorp and the Bank since January 1, 2015:
an increase in the minimum Tier 1 capital ratio from 4.00% to 6.00% of risk-weighted assets;
a new category and a required 4.50% of risk-weighted assets ratio is established for “common equity Tier 1” as a subset of Tier 1 capital limited to common equity;
a minimum non-risk-based leverage ratio is set at 4.00%;
changes in the permitted composition of Tier 1 capital to exclude trust preferred securities (subject to certain grandfathering exceptions for organizations like Hope Bancorp which were under $15 billion in assets as of December 31, 2009), mortgage servicing rights and certain deferred tax assets and to include unrealized gains and losses on available-for-sale debt and equity securities (unless the organization opts out of including such unrealized gains and losses).
the risk-weights of certain assets for purposes of calculating the risk-based capital ratios are changed for high volatility commercial real estate acquisition, development and construction loans, certain past due non-residential mortgage loans and certain mortgage-backed and other securities exposures; and
an additional capital conservation buffer of 2.5% of risk weighted assets above the regulatory minimum capital ratios, which will be phased in until 2019 beginning at 0.625% of risk-weighted assets for 2016 and increasing 0.625% annually (1.25% for 2017), and which must be met to avoid limitations on the ability of the Bank to pay dividends, repurchase shares or pay discretionary bonuses.
Management believes that, as of December 31, 2017, Hope Bancorp and the Bank would meet all requirements under the New Capital Rules applicable to them on a fully phased-in basis if such requirements were currently in effect.
Including the capital conservation buffer of 2.5%, the New Capital Rules would result in the following minimum ratios to be generally considered “well capitalized” for bank regulatory purposes: (i) a Tier 1 capital ratio of 8.5%, (ii) a common equity Tier 1 capital ratio of 7.0%, and (iii) a total capital ratio of 10.5%. At December 31, 2017, the respective capital ratios of Hope Bancorp and the Bank exceeded the minimum percentage requirements to generally be deemed “well-capitalized” for bank regulatory purposes. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
While the New Capital Rules set higher regulatory capital standards for Hope Bancorp and the Bank, bank regulators may also continue their past policies of expecting banks to maintain additional capital beyond the new minimum requirements. The implementation of the New Capital Rules or more stringent requirements to maintain higher levels of capital or to maintain higher levels of liquid assets could adversely impact the Company’s net income and return on equity, restrict the ability to pay dividends or executive bonuses and require the raising of additional capital. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Prompt Corrective Action Provisions
The Federal Deposit Insurance Act (“FDI Act”) requiresand the federalCalifornia Financial Code, California state chartered commercial banks may generally engage in any activity permissible for national banks. Therefore, the Bank may form subsidiaries to engage in the many so-called “closely related to banking” or “nonbanking” activities commonly conducted by national banks in operating subsidiaries or by subsidiaries of bank regulatory agenciesholding companies. Further, California state chartered banks may conduct certain financial activities permitted under GLBA in a “financial subsidiary” to take “prompt corrective action” with respect tothe same extent as a depository institution if that institution does not meet certain capital adequacy standards, including requiringnational bank, provided the prompt submission of an acceptable capital restoration plan. Depending on the bank’s capital ratios, the agencies’ regulations define five categories in which an insured depository institution will be placed: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. At each successive lower capital category, an insured bank is subject to more restrictions, including restrictions on the bank’s activities, operational practices or the ability to pay dividends or executive bonuses. Based upon its capital levels, a bank that is classified as and remains well-capitalized, adequately capitalized, or undercapitalized may be treated as though it werewell-managed and in the next lower capital category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or unsound condition, or an unsafe or unsound practice, warrants such treatment.
The prompt corrective action standards were also changed to conformsatisfactory compliance with the New Capital Rules. Under the new standards, in order to be generally considered well-capitalized for bank regulatory purposes, the bank will be required to meet the new common equity Tier 1 ratio of 6.5%, an increased Tier 1 ratio of 8% (increased from 6%Community Reinvestment Act (the “CRA”), an unchanged total capital ratio of 10% and an unchanged leverage ratio of 5%.

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The federal banking agencies also may require banks and bank holding companies subject to enforcement actions to maintain capital ratios in excess of the minimum ratios otherwise generally required to be deemed well capitalized for bank regulatory purposes, in which case institutions mayBank currently conducts no longer be deemed to be well capitalized and may therefore be subject to certain restrictions such as on taking brokered deposits.
Volcker Rule
In December 2013, the federal bank regulatory agencies adopted final rules that implement a part of the Dodd-Frank Act commonly referred to as the “Volcker Rule.” Under these rules and subject to certain exceptions, banking entities are restricted from engaging innon-banking or financial activities that are considered proprietary trading and from sponsoring or investing in certain entities, including hedge or private equity funds that are considered covered funds. These rules became effective on April 1, 2014, although certain provisions were subject to delayed effectiveness until July 2017 under rules promulgated by the FRB. Hope Bancorp and the Bank had no investment positions or relationships at December 31, 2017 that were subject to the final rule. Therefore, while these new rules may require us to conduct certain internal analyses and reporting to ensure continued compliance, they did not require any material changes in our operations or business.through subsidiaries.
Bank Holding Company Regulation
Hope Bancorp is a registered bank holding company under the Bank Holding Company Act. As a bank holding companies and their subsidiaries arecompany, Hope Bancorp is subject to significant regulation, supervision and restrictionsregular examination by federalthe FRB and state laws and regulatory agencies, which may affectis required to file periodic reports of its operations with the cost of doing business, and may limit permissible activities and expansion or impact the competitive balance between banksFRB and other non-bank financial services providers.
A wide range of requirements and restrictions are contained in both federal and state banking laws, which together with implementing regulatory authority:
Require periodicsuch reports to, and such additional reports of information as the FRB may require;require.
Require bankBank holding companies are required to meet or exceed increasedmaintain certain levels of capital (See “Capital Adequacy Requirements”);
Require that bank holding companies and must serve as a source of financial and managerial strength to subsidiary banks and commit resources as necessary to support each subsidiary bank.
Limit FRB regulations and polices limit the dividends payable to shareholders and restrict the ability ofa bank holding companiescompany may pay to obtain dividendsits stockholders and the amount of its shares that it may repurchase (See “Dividends and Stock Repurchases”). FRB rules and policies also regulate provisions of certain bank holding company debt and the FRB may impose interest ceilings and reserve requirements on such debt and require prior approval to purchase or other distributions from their subsidiary banks. Hope Bancorp’s ability to pay dividends on its common stock is subject to legal and regulatory restrictions. Substantially all of Hope Bancorp’s funds to pay dividends or to pay principal and interest on ourredeem debt obligations are derived from dividends paid by the Bank;securities in certain situations.
RequireThe FRB may require a bank holding company to terminate an activity or terminate control of or liquidate or divest certain subsidiaries, affiliates or investments if the FRB believes the activity or the control of the subsidiary or affiliate constitutes a significant risk to the financial safety, soundness or stability of any bank subsidiary;subsidiary. Under certain circumstances, the FRB could, for example, prohibit Hope Bancorp from paying dividends or repurchasing its common stock on the basis that doing would be an unsafe or unsound banking practice.
Require the prior approval of senior executive officer or director changes and prohibit golden parachute payments, including changeThe activities in control agreements, or new employment agreements with such payment terms, which are contingent upon termination, if an institution has been deemed to be in “troubled condition”;
Regulate provisions of certaina bank holding company debt, including the authoritymay engage are limited to impose interest ceilings and reserve requirements on such debt and require prior approval to purchase or redeem securities in certain situations;
Require prior approval for the acquisition of 5% or more of the voting stock of a bank or bank holding company by bank holding companies or other acquisitions and mergers with banks, while considering certain competitive, management, financial, compliance and, other factors in granting these approvals, in addition to similar California or other state banking agency approvals which may also be required; and
Require prior notice and/or prior approval of the acquisition of control of a bank or bank holding company by a shareholder or individuals acting in concert with ownership or control of 10% of the voting stock being a presumption of control.
Other Restrictions on the Company’s Activities
Subject to prior notice or FRB approval, if and as applicable, bank holding companies may generally engage in, or acquire shares of companies engaged in,those activities determined by the FRB to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Bank holding companies that elect and retain “financial holding company” status pursuant to the Gramm-Leach-Bliley Act of 1999 (“GLBA”(the “GLBA”) may also engage in these nonbanking activities and broader securities, insurance, merchant banking and other activities that are determined to be “financial in nature” or are incidental or complementary to activities that are financial in nature without prior FRB approval. Pursuant to GLBA and the Dodd-Frank Act, in order tonature. To elect and retain financial holding company status, a bank holding company and all depository institution subsidiaries of a bank holding company must be considered well capitalized and well managed, and, except in limited circumstances, depository subsidiaries must be in satisfactory compliance with the Community Reinvestment Act (“CRA”), which requires banks to help meet the credit needs of the communities in which they operate. Failure to sustain compliance with these requirements or correct any non-compliance

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within a fixed time period could lead to divestiture of subsidiary banks or require all activities to conform to those permissible for a bank holding company.certain other requirements. Hope Bancorp has not elected financial holding company status and neither Hope Bancorp nor the Bank has engaged in any activities determined by the FRB to be financial in nature or incidental or complementary to activities that are financial in nature.
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A bank holding company must seek approval from the FRB prior to acquiring all or substantially all of the assets of any bank or bank holding company or the ownership or control of voting shares of any bank or bank holding company if, after giving effect to such acquisition, it would own or control, directly or indirectly, more than 5 percent of a bank. Under the Bank Merger Act, the prior approval of the FDIC is required for the Bank to merge with another bank or purchase all or substantially all of the assets or assume any of the deposits of another FDIC-insured depository institution. Federal banking regulators review competition, management, financial, compliance and other factors when considering applications for these approvals. Similar California or other state banking agency approvals may also be required.
The Company is also a bank holding company within the meaning of Section 3700 of the California Financial Code. Therefore, the BankCompany and any of its subsidiaries are subject to examination by, and may be required to file reports with, the DBO. DBOCalifornia Department of Financial Protection and Innovation (the “DFPI”). DFPI approvals are also required for certainbank mergers and acquisitions.
Securities Exchange Act of 1934
The Company’s common stock is publicly held and listed on the NASDAQ Stock Market (“NASDAQ”), and the Company is subject to the periodic reporting, information, proxy solicitation, insider trading, corporate governance and other requirements and restrictions of the Securities Exchange Act of 1934 and the regulations of the Securities and Exchange Commission (“SEC”) promulgated thereunder as well as listing requirements of NASDAQ.
Sarbanes-Oxley Act
The Company is subject to the accounting oversight and corporate governance requirements of the Sarbanes-Oxley Act of 2002, including, among other things, required executive officer certification of financial information presentations, requirements for board audit committees and their members, and disclosure of controls and procedures and internal control over financial reporting.
Bank Regulation
AsThe Bank is a California commercialstate-chartered bank whose depositsdeposit accounts are insured by the FDIC, up to applicable limits. As such, the Bank is subject to regulation, supervision and regular examination by the DBODFPI and the FDIC. The Bank is also subject to regulation, supervision and examination by the FDIC, asConsumer Finance Protection Bureau (“CFPB”) with respect to federal consumer financial laws. While the Bank’s primary federal regulator, and must additionally comply withBank is not a member of the FRB, the Bank is also subject to certain applicable regulations of the FRB. Specific federal
Federal and state laws and regulations that are applicable to banks regulate, among other things, the scope of their business, their investments, their reserves against deposits, the timing of the availability of deposited funds, theirlending activities, relating to dividends, investments, loans, the nature and amount of and collateral for certain loans, servicing and foreclosing on loans, borrowings, capital requirements, certain check-clearing activities, dividends, branching, and mergers and acquisitions. California banks are also subject to statutes and regulations including FRB Regulation O, and Federal Reserve Act Sections 23A and 23B and Regulation W, which restrict or limit loans or extensions of credit to “insiders”, including officers, directors, and principal shareholders,stockholders, and loans or extension of credit by banks to affiliates or purchases of assets from affiliates, including parent bank holding companies, except pursuant to certain exceptions and only on terms and conditions at least as favorable to those prevailing for comparable transactions with unaffiliated parties. The Dodd-Frank ActWall Street Reform and Consumer Protection Action (the “Dodd-Frank Act”) expanded definitions and restrictions on transactions with affiliates and insiders under Sections 23A and 23B and also lending limits for derivative transactions, repurchase agreements, and securities lending and borrowing transactions.
Pursuant toUnder the Federal Deposit Insurance Act (“FDI ActAct”) and the California Financial Code, California state chartered commercial banks may generally engage in any activity permissible for national banks. Therefore, the Bank may form subsidiaries to engage in the many so-called “closely related to banking” or “nonbanking” activities commonly conducted by national banks in operating subsidiaries or by subsidiaries of bank holding companies. Further, California state chartered banks may conduct certain financial activities permitted under GLBA in a “financial subsidiary” to the same extent as a national bank, provided the bank is and remains well-capitalized, well-managed and in satisfactory compliance with the CRA.Community Reinvestment Act (the “CRA”). The Bank currently conducts no non-banking or financial activities through subsidiaries.
Capital Adequacy Requirements
Hope Bancorp and the Bank are subject to similar regulatory capital requirements administered by its primary federal supervisory banking agencies. Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the federal banking agencies have adopted capital rules based on the Basel III Accord (the “Basel III Capital Rules”). The Basel III Capital Rules became effective on January 1, 2015. The Basel III Capital Rules are risk-based, meaning that the levels of capital required vary based on the perceived degree of risk associated with a banking organization’s balance sheet assets, such as loans and investment securities, and those recorded as off-balance sheet items, such as commitments, letters of credit, and recourse arrangements. The risk classifications and, therefore, the required capital amounts may be subject to qualitative judgments by regulators about components, risk-weighting, and other factors.
The Basel III Capital Rules (i) establish a capital measure called “common equity Tier 1 and a related regulatory capital ratio of common equity Tier 1 to risk‑weighted assets, (ii) specify that Tier 1 capital consists of common equity Tier 1 and “additional Tier 1 capital” instruments meeting certain requirements, (iii) mandate that most deductions and adjustments to regulatory capital measures be made to common equity Tier 1 and not to the other components of capital, and (iv) specify deductions from and adjustments to capital that are somewhat more expansive than those under prior capital rules. The Basel III Capital Rules differ from earlier capital rules by excluding from Tier 1 capital trust preferred securities (subject to certain grandfathering exceptions for organizations like Hope Bancorp, which had less than $15 billion in assets as of December 31, 2009), mortgage servicing rights and certain deferred tax assets and to include unrealized gains and losses on available for sale debt and equity securities (unless the organization opts out of including such unrealized gains and losses).
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Under the Basel III Capital Rules, the minimum capital ratios applicable to Hope Bancorp and the Bank are as follows:
•4.5% common equity Tier 1 to risk‑weighted assets;
•6.0% Tier 1 capital (that is, common equity Tier 1 plus additional Tier 1 capital) to risk‑weighted assets;
•8.0% total capital (that is, Tier 1 capital plus Tier 2 capital) to risk‑weighted assets; and
•4.0% Tier 1 capital to average consolidated assets as reported on regulatory financial statements (known as the “leverage ratio”). To be considered well-capitalized under the Prompt Corrective Action framework, the Bank must maintain a minimum Tier 1 leverage ratio of at least 5.0%.
The Basel III Capital Rules include an additional “capital conservation buffer” of 2.5% of risk-weighted assets above the regulatory minimum capital ratios. If Hope Bancorp and the Bank do not maintain capital sufficient to satisfy the capital conservation buffer, we would face restrictions in our ability to pay dividends, repurchase shares, and pay discretionary bonuses.
Including the capital conservation buffer of 2.5%, the minimum ratios for a banking organization are as follows: (i) a common equity Tier 1 capital ratio of 7.0%, (ii) a Tier 1 capital ratio of 8.5% and (iii) a total capital ratio of 10.5%. Management believes that as of December 31, 2023, Hope Bancorp and the Bank met all requirements under the Basel III Capital Rules applicable to them on a fully phased-in basis, including the capital conservation buffer. At December 31, 2023, the ratios of each of Hope Bancorp and the Bank exceeded the minimum percentage requirements to generally be deemed “well-capitalized” for bank regulatory purposes and satisfied the capital conservation buffer requirement. See Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
While the Basel III Capital Rules set higher regulatory capital standards for Hope Bancorp and the Bank, bank regulators may also continue their past policies of expecting banks to maintain capital in excess of the minimum requirements. The implementation of the Basel III Capital Rules or more stringent requirements to maintain higher levels of capital or to maintain higher levels of liquid assets could adversely impact the Company’s net income and return on equity, restrict the ability to pay dividends or executive bonuses and require the raising of additional capital.
The Bank is also subject to capital adequacy requirements under the California Financial Code.
See Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Increased Supervision and Regulation for Bank Holding Companies with Consolidated Assets of More than $10 Billion
As a banking organization with consolidated assets exceeding $10 billion, the Company is subject to heightened supervision and regulation imposed by the Dodd-Frank Act, such as the following:
•We are subject to periodic examination by the CFPB with respect to compliance with federal consumer financial laws. Although we were previously subject to regulations issued by the CFPB, the Bank’s primary federal regulator, the FDIC, previously had responsibility for our consumer compliance examinations. See “Consumer Finance Protection Bureau.”
•We are subject to the maximum permissible interchange fee for swipe transactions, equal to no more than 21 cents plus 5 basis points of the transaction value for many types of debit interchange transactions.
•We calculate our FDIC deposit assessment base using a performance score and DBO Enforcement Authoritya loss-severity score system described below in “Deposit Insurance.”
•We are subject to the “Volcker Rule,” which generally restricts us from engaging in activities that are considered proprietary trading and from sponsoring or investing in certain entities, including hedge or private equity funds that are considered covered funds. While Hope Bancorp and the Bank had no investment positions or relationships at December 31, 2023, that were subject to the Volcker Rule, we may be subject to the compliance and recording keeping provisions of this rule.
The Dodd-Frank Act requires banking organizations with consolidated assets exceeding $10 billion to establish board-level risk committees and to perform annual stress tests. The Economic Growth, Regulatory Relief, and Consumer Protection Act enacted in 2018 raises the asset thresholds for these requirements to $50 billion and $100 billion, respectively.
Many aspects of the Dodd-Frank Act continue to be subject to rule-making or proposed change, making it difficult to anticipate the overall financial impact on the Company, its customers or the financial industry in general. Provisions in the legislation that affect deposit insurance assessments, payment of interest on demand deposits and interchange fees could increase the costs associated with deposits as well as place limitations on certain revenues those deposits may generate.
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Prompt Corrective Action
The FDI Act requires the federal bank regulatory agencies to take “prompt corrective action” with respect to a depository institution that does not meet certain capital adequacy standards, including requiring the prompt submission of an acceptable capital restoration plan. Depending on the bank’s capital ratios, the agencies’ regulations define five categories in which an insured depository institution will be placed: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. At each successive lower capital category, an insured bank is subject to more restrictions, including restrictions on the bank’s activities, operational practices, ability to accept, renew or rollover brokered deposits, and to pay dividends or executive bonuses.
The prompt corrective action standards conform with the Basel III Capital Rules. In order to be generally considered well-capitalized for bank regulatory purposes, the Bank is required maintain the following minimum capital ratios: a common equity Tier 1 ratio of 6.5%, a Tier 1 ratio of 8%, a total capital ratio of 10% and a leverage ratio of 5%. A bank meeting the minimum capital ratios required to be considered well-capitalized, adequately capitalized, or undercapitalized may, however, may be treated as though it were in the next lower capital category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or unsound condition or practice warrants such treatment.
The federal banking agencies also may require banks and California regulatory structure givesbank holding companies subject to enforcement actions to maintain capital ratios in excess of the minimum ratios otherwise generally required to be deemed well capitalized for bank regulatory agencies extensive discretionpurposes, in connectionwhich case institutions may no longer be deemed to be well capitalized and may therefore be subject to certain restrictions such as on taking brokered deposits.
Consumer Compliance Laws
The Bank must comply with their supervisorynumerous federal and enforcement activitiesstate consumer protection statutes and examination policies,implementing regulations, including, policies with respectbut not limited to, the classificationFair Debt Collection Practices Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Truth in Lending Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act, the California Homeowner Bill of assetsRights and various federal and state privacy protection laws, including the Telephone Consumer Protection Act, and CAN-SPAM Act. The Bank and Hope Bancorp are also subject to federal and state laws prohibiting unfair or fraudulent business practices, untrue or misleading advertising and unfair competition.
These laws and regulations mandate certain disclosure and reporting requirements and regulate the manner in which financial institutions must deal with customers when taking deposits, making loans, servicing, collecting and foreclosure of loans, and providing other services. Failure to comply with these laws and regulations can subject the Bank to various penalties, including but not limited to enforcement actions, injunctions, fines or criminal penalties, punitive damages to consumers, and the establishmentloss of appropriate loan loss reservescertain contractual rights.
Community Reinvestment Act
The Bank is subject to the CRA, which requires federal banking regulators to evaluate the record of a financial institution in meeting the credit needs of its local communities, including low and moderate income neighborhoods. The federal banking agencies consider a financial institution’s compliance with the CRA into account when considering regulatory applications for regulatory purposes.mergers and other expansionary activities. The regulatory agencies have adopted guidelinesBank received a “Satisfactory” rating in the most recent public disclosure of CRA performance evaluation released by the FDIC in 2021, which states that the Bank’s CRA performance under the lending, investment, and service tests supports the overall rating.
On October 24, 2023, the federal banking regulators issued new CRA rules intended to assistadapt to changes in identifyingthe banking industry, including the expanded role of mobile and addressing potential safetyonline banking, and soundness concerns before an institution’s capital becomes impaired.to tailor performance standards to account for differences in bank size and business models. The guidelinesnew rule also includes data collection and reporting requirements, some of which are applicable only to banks with over $10 billion in assets. Most provisions of the final rule will become effective on January 1, 2026, and the data reporting requirements will become effective on January 1, 2027.
USA PATRIOT Act and Anti-Money Laundering Laws
Under the USA PATRIOT Act of 2001, financial institutions are subject to prohibitions against specified financial transactions and account relationships, as well as enhanced due diligence standards that are intended to prevent and detect the use of the United States financial system for money laundering and terrorist financing activities. The act requires financial institutions, including banks, to establish operationalanti-money laundering programs, including employee training and managerialindependent audit requirements, meet minimum standards generally relating to: (1) internal controls, informationspecified by the act, follow minimum standards for customer identification and maintenance of customer identification records, and regularly compare customer lists against lists of suspected terrorists, terrorist organizations and money launderers.
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The Bank Secrecy Act (the “BSA”) establishes requirements for recordkeeping and reporting by banks and other financial institutions that are intended to help identify the source, volume and movement of currency and other monetary instruments into and out of the United States in order to help detect and prevent money laundering connected with drug trafficking, terrorism and other criminal activities. Under the BSA and related regulations, banking institutions must file suspicious activity reports and maintain programs designed to assure and monitor compliance with certain recordkeeping and reporting requirements regarding currency transactions. The programs must include systems and internal audit systems; (2) loan documentation; (3) credit underwriting; (4) interest-rate exposure; (5) asset growthcontrols to assure ongoing compliance, provide for independent testing of such systems and asset quality;compliance and (6) compensation, fees,provide appropriate personnel training.
The Anti-Money Laundering Act of 2020 (“AMLA”), which amends the BSA, was enacted in January 2021. The AMLA is intended to be a comprehensive reform and benefits. Further,modernization to U.S. bank secrecy and anti-money laundering laws. Among other things, it codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the regulatory agencies have adopted safety and soundness guidelines for asset quality anddevelopment of standards for evaluating technology and monitoring earningsinternal processes for BSA compliance; expands enforcement- and investigation-related authority, including increasing available sanctions for certain BSA violations and instituting whistleblower incentives and protections.
The federal banking agencies consider a financial institution’s effectiveness in combating money laundering when considering regulatory applications for mergers and other expansionary activities.
Loans to ensure that earnings are sufficient forOne Borrower
Under California law, the maintenance of adequate capitalBank’s ability to make aggregate secured and reserves. If, as a result of an examination, the DBO or the FDIC should determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspectsunsecured loans to borrower is limited to 25% and 15%, respectively, of the Bank’s operations are unsatisfactory or that the Bank or its management is violating or has violated any law or regulation, the DBO and the FDIC have residual authority to:
Require affirmative action to correct any conditions resulting from any violation or practice;

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Direct an increase inunimpaired capital and surplus. The Bank has established internal loan limits that are lower than the maintenance of higher specific minimum capital ratios, which could preclude the Bank from being deemed well capitalized and restrict its ability to accept certain brokered deposits;
Restrict the Bank’s growth geographically, by products and services, or by mergers and acquisitions, including precluding bidding in FDIC receivershipslegal lending limits for failed banks;a California bank.
Enter into or issue informal or formal enforcement actions, including required Board resolutions, Matters Requiring Board Attention (MRBA), memoranda of understanding, written agreements and consent or cease and desist orders or prompt corrective action orders to take corrective action and cease unsafe and unsound practices;
Require prior approval of senior executive officer or director changes; remove officers and directors and assess civil monetary penalties; and
Terminate FDIC insurance, revoke the charter and/or take possession of and close and liquidate the Bank or appoint the FDIC as receiver.
Deposit Insurance
The FDIC is an independent federal agency that insures deposits, up to prescribed statutory limits, of federally insured banks and savings institutions, and safeguards the safety and soundness of the depository institutions. The FDIC insures our customer deposits through the DIF up to prescribed limits.limits, currently $250 thousand per customer. The FDIC may terminate a depository institution’s deposit insurance upon a finding that the institution’s financial condition is unsafe or unsound, or that the institution has engaged in unsafe or unsound practices that pose a risk to the DIF or that may prejudice the interest of the bank’s depositors. The termination of the Bank’s deposit insurance would result in the revocation of the Bank’s charter by the DBO.DFPI.
We are generally unable to control the amount of assessments that we pay for FDIC insurance, which can be affected by the cost of bank failures to the FDIC, among other factors. The Dodd-Frank Act revised the FDIC’s DIF management authority by setting requirements for the Designated Reserve Ratio (the DIF balance divided by estimated insured deposits) and redefining the assessment base which is used to calculate banks’ quarterly assessments. The amount of FDIC assessments paid by each DIF member institution is based on its asset size and its relative risk of default as measured by regulatory capital ratios and other supervisory factors.
In 2016,November 2023, the FDIC adoptedapproved a rule increasingspecial assessment at the DIF’s minimum reserve ratiorate of approximately 13.4 basis points per year, to 1.35% as required bybe paid in eight quarterly installments beginning in the Dodd Frank Act. As required by the Dodd-Frank Act, the costsfirst quarter of increasing the DIF’s reserve ratio from 1.15% to 1.35%2024. This rate will be borne byapplied to an assessment base of the insured depository institutions with total consolidated assetsinstitution’s estimated uninsured deposits reported as of $10 billion or more, which has an impact onDecember 31, 2022, adjusted to exclude the Bank’s deposit insurance assessments because the Bank now has in excess of $10first $5 billion in assets. estimated uninsured deposits. We recorded an expense of $4.0 million in 2023 for the estimated total amount due under this special assessment.
Any future increaseschanges in FDIC insurance assessments may have a material and adverse effect on our earnings and could have a material adverse effect on the value of, or market for, our common stock.
Safety and Soundness Standards; Regulatory Enforcement Authority
The federal and California bank regulatory agencies have extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of appropriate loan loss reserves for regulatory purposes. The federal bank regulatory agencies have adopted guidelines to assist in identifying and addressing potential safety and soundness concerns before an institution’s capital becomes impaired. The guidelines establish operational and managerial standards generally relating to: (1) internal controls, information systems, and internal audit systems; (2) loan documentation; (3) credit underwriting; (4) interest-rate exposure; (5) asset growth and asset quality; and (6) compensation, fees, and benefits. Further, the regulatory agencies have adopted safety and soundness guidelines for asset quality and for evaluating and monitoring earnings to ensure that earnings are sufficient for the maintenance of adequate capital and reserves.
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If the FRB, the FDIC or the DFPI should determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of the Company’s or the Bank’s operations are unsatisfactory or that the Company or the Bank or management is violating or has violated any law or regulation, these agencies have the authority to:
•Require affirmative action to correct any conditions resulting from any violation or practice;
•Direct an increase in capital and the maintenance of higher specific minimum capital ratios, which could preclude Hope Bancorp or the Bank from being deemed well capitalized which, in the case of the Bank, would restrict its ability to accept certain brokered deposits, for example;
•Restrict Hope Bancorp’s or the Bank’s growth geographically, by products or services, or by mergers and acquisitions;
•Enter into or issue informal or formal enforcement actions, including required board resolutions, memoranda of understanding, written agreements and consent or cease and desist orders or prompt corrective action orders to take corrective action and cease unsafe and unsound practices;
•Assess civil money penalties;
•Require prior approval of senior executive officer or director changes; remove officers and directors and assess civil monetary penalties; and
•Terminate FDIC insurance, revoke the charter and/or take possession of and close and liquidate the Bank or appoint the FDIC as receiver.
Dividends and Stock Repurchases
Hope Bancorp’s ability to pay dividends or repurchase shares of its common stock is subject to restrictions set forth in the Delaware General Corporation Law. The Delaware General Corporation Law provides that a Delaware corporation may pay dividends or repurchase its shares either (i) out of the corporation’s surplus (as defined by Delaware law), or (ii) if there is no surplus, out of the corporation’s net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. It is the FRB’s policy, however, that bank holding companies should generally pay dividends on common stock only out of income available over the past year,previous four quarters, and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. FRB policy requires that a bank holding company must notify the FRB if its dividends or repurchase or redemption of shares would cause a net reduction in the amount of such capital instrument outstanding at the beginning of the quarter in which the redemption or repurchase occurs. It is also the FRB’s policy that bank holding companies should not maintain dividend levels or repurchase shares in amounts that would undermine their ability to be a source of strength to its banking subsidiaries. The FRB also discourages dividend payment ratios that are at maximum allowable levels unless both asset quality and capital are very strong. In addition, if Hope Bancorp does not maintain an adequate capital conservation buffer under the Basel III Capital Rules, its ability to pay dividends to or repurchase shares from stockholders may be restricted.
The Bank is a legal entity that is separate and distinct from Hope Bancorp. Hope Bancorp depends on the performanceBank’s payment of the Bank for funds that the Bank may pay to Hope Bancorpdividends as dividendsits primary source of cash for use in Hope Bancorp’s operations, Hope Bancorp’s payment of dividends to stockholders and that Hope Bancorp may useBancorp’s stock repurchases. The Bank’s ability to pay dividends to shareholders. The ability of the Bank to pay a cash dividend to Hope Bancorp is subject to provisions of the California Financial Code that limit the amount available for cash dividends to the lesser of a bank’s retained earnings or net income for its last three fiscal years (less any distributions to shareholdersstockholders made during such period). Where the above test is not met, cash dividends may still be paid, with the prior approval of the DBO,DFPI, in an amount not exceeding the greatest of (1) retained earnings of the bank;Bank; (2) the net income of the bankBank for its last fiscal year; or (3) the net income of the bankBank for its current fiscal year. The Bank’s ability to pay cash dividends to Hope Bancorp will also depend upon management’s assessment of future capital requirements, contractual restrictions, and other factors. The New Capital Rules may also restrict dividends byIn addition, if the Bank if the additionaldoes not maintain an adequate capital conservation buffer is not achieved.

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Operations and Consumer Compliance Laws
The Bank must comply with numerous federal and state anti-money laundering and consumer protection statutes and implementing regulations, including, but not limited to,under the USA PATRIOT Act of 2001,Basel III Capital Rules, the Bank Secrecy Act, the Foreign Account Tax Compliance Act, the CRA, the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Truth in Lending Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act, the California Homeowner Bill of Rights and various federal and state privacy protection laws, including the Telephone Consumer Protection Act, and CAN-SPAM Act. Noncompliance with any of these laws could subject the Bankmay face restrictions on its ability to compliance enforcement actions as well as lawsuits and could also result in administrative penalties, including, fines and reimbursements. The Bank andpay dividends to Hope Bancorp are also subject to federal and state laws prohibiting unfair or fraudulent business practices, untrue or misleading advertising and unfair competition.
These laws and regulations mandate certain disclosure and reporting requirements and regulate the manner in which financial institutions must deal with customers when taking deposits, making loans, servicing, collecting and foreclosure of loans, and providing other services. Failure to comply with these laws and regulations can subject the Bank to various penalties, including but not limited to enforcement actions, injunctions, fines or criminal penalties, punitive damages to consumers, and the loss of certain contractual rights.
The Bank received a “Satisfactory” rating in the most recent public disclosure of CRA performance evaluation released by the FDIC in 2015, which states that the Bank’s CRA performance under the Lending, Investment, and Service Tests supports the overall rating.Bancorp.
Consumer FinanceFinancial Protection Bureau
The Dodd-Frank Act created the CFPB as an independent entity within the FRB with broad rulemaking, supervisory and enforcement authority over consumer financial products and services, including deposit products, residential mortgages, home-equity loans and credit cards. The bureau’sCFPB’s functions include investigating consumer complaints, conducting market research, rulemaking, supervising and examining bank consumer transactions, and enforcing rules related to consumer financial products and services. CFPB regulations and guidance apply to all financial institutions and banks with $10 billion or more in assets are subject to examination by the CFPB. Banks with less than $10 billion in assets continue to be examined for compliance by their primary federal banking agency. The Bank is subject to examination by the CFPB. The CFPB has the authority to bring formal and informal enforcement actions against the Bank similar to those that may be brought by the federal banking regulators discussed above.
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In 2014, the CFPB adopted revisions to Regulation Z, which implementimplements the Truth in Lending Act, pursuant to the Dodd-Frank Act, and apply to consumer mortgages. The revisions mandate specific underwriting criteria for home loans in order for creditors to make a reasonable, good faith determination of a consumer’s ability to repay and establish certain protections from liability under the requirements for “qualified mortgages” that meet certain specific standards. As required by the Dodd-Frank Act, the CFPB also promulgated TILA-RESPA Integrated Disclosure (”TRID”) rules which became effective in 2015 and require new mortgage disclosures.
Human Capital Resources
It is our philosophy to attract, develop, and retain a diverse range of qualified bankers who share our values, entrepreneurial spirit and unwavering commitment to service. The Company respects, values, and invites diversity in our team members, customers, suppliers, marketplace, and community. We seek to recognize the unique contribution each individual brings to our Company, and we are fully committed to supporting a rich culture of diversity as a cornerstone to our success.
Retaining a culture of diversity and inclusion requires active engagement and motivation. Through our social rewards and recognition platform, called Bucketlist, employees recognize one another for milestones and achievements, or simply express gratitude to anyone within the Bank believes it has fully implementedfor demonstrating Bank of Hope Core Values of integrity, teamwork, fairness, initiative, transparency and satisfaction.
We provide professional development opportunities to team members and seek to improve retention, development, and job satisfaction of team members from diverse groups by providing career skills training, mentoring, and tuition fee reimbursements to support job-related higher education. All employees of Bank of Hope are required to undergo various training courses on a quarterly basis to promote their ongoing growth and professional development as bankers. Training courses focus on compliance, banking regulations, information security, cybersecurity, and workplace safety, among others, as well as business code and ethics topics, including confidentiality, and our whistle blower, anti-harassment, and conflict of interest policies.
We offer a leading compensation and benefits package that includes medical, dental and vision healthcare, 401(k) benefits, parental and family leave, holiday and paid time off, and tuition assistance. We are committed to the TRID requirements.long-term health of our employees and provide basic life, basic accidental death and dismemberment (AD&D) and long-term disability insurance, Flexible Spending Accounts (FSA), and discounted gym memberships, among others. Our benefits package also features value-added services focused on our employees’ well-being and mental health, including survivor assurance programs, financial wellness counseling, and mental wellness counseling.
Employees
As of December 31, 2017,2023, we had 1,4701,244 full-time equivalent employees compared to 1,372with 1,549 full-time equivalent employees at December 31, 2016.2022. In the third quarter of 2023, the Company announced a strategic reorganization that is expected to generate cost savings through increased efficiencies that include branch consolidations and reduced staffing. None of our employees are represented by a union or covered by a collective bargaining agreement. Management believes that its relations with its employees are good.

Throughout our history, diversity has been a key competitive advantage for Bank of Hope. Building a culture of inclusion and high performance has been a growing focus of management and an essential element of our long-term success. As of December 31, 2023, women accounted for 64% of our total workforce and represented 32% of our associates with positions of senior vice president and above. We strive to attract, develop, and retain a diverse range of qualified bankers who share our values, entrepreneurial spirit and unwavering commitment to service.

Our employees actively share their talents in their communities through volunteer activities in education, economic development, human and health services, and community reinvestment. Our employees are committed to be good neighbors that foster growth for our customers and communities. As a community-based bank, we are committed to being model corporate citizens and through our communities through various forms of investments, contributions, and volunteer work.
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Some of the highlights we have taken to be a socially responsible company are:
•Approximately 43% of the Bank’s branches are located in low-to-moderate income areas;
•Our employees had nearly 1,600 hours of CRA-reportable volunteer hours in 2023;
•We funded approximately $1.70 billion of loans in 2023;
•We invest in affordable housing partnership investments, CRA investments, and CDFI investments;
•We had approximately 616 reportable small business loans totaling to $205.3 million of CRA-reportable small business lending in 2023 with 538 small business loans within the Bank’s assessment areas for $172.6 million;
•We had approximately $620 thousand in charitable donations and grants to 160 organizations to support the social, educational and cultural wellness of the communities in which we operate; and
•We awarded 60 students grants of $2,500 each in 2023. In aggregate, we contributed approximately more than $2.8 million to the Hope Scholarship Foundation since its establishment in 2001.
In 2022, we launched and published our initial Environmental, Social and Governance (“ESG”) report and webpage in our investor relation website (www.ir-hopebancorp.com). The ESG report contains our ESG progress including the establishment of an ESG framework, ESG policy, and our achievements on ESG compliance.
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Item 1A.RISK FACTORS

Item 1A.RISK FACTORS
In the course of conducting itsour business operations, we are exposed to a variety of risks, some of which are inherent in the financial services industry and others of which are more specific to itsour own business. The following discussion addresses the most significant risks that could affect our business, financial condition, liquidity, results of operations, and capital position. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business. If any of these known or unknown risks or uncertainties actually occurs, our business, financial condition and results of operations may be materially and adversely effected. In that event, the market price for our common stock willwould likely decline.
Risk relatingRisks Related to our businessBusiness
Economic conditions in the markets in which we operate may adversely affect our loan portfolio and reduce the demand for our services. We focus our business primarily in Korean-American communities in California, the greater New York City, Chicago, Houston and Dallas, and Seattle metropolitan areas, New Jersey, Virginia, Alabama, and Georgia. Adverse economic conditions in our market areas could potentially have a material adverse impact on the quality of our business. A renewedAn economic slowdown in the markets in which we operate, currently andor may do so in the future may have any or all of the following consequences, any of which may reduce our net income and adversely affect our financial condition:
•loan delinquencies may increase;
•problem assets and foreclosures may increase;
•the level and duration of deposits may decline;
•demand for our products and services may decline; and
•collateral for loans may decline in value below the principal amount owed by the borrower.
We have a high level of loans secured by real estate collateral. A downturn in the real estate market may seriously impair our loan portfolio. As of December 31, 2017,2023, approximately 77%64% of our loan portfolio consisted of loans secured by various types of commercial real estate. Following the financial crisis of 2008, there was a generalestate (excluding 1-4 family residential mortgage loans). A slowdown in the economy andis often accompanied by declines in the value of real estate. Although the economy has rebounded and real estate, prices have gradually recovered from their earlier low levels, it is possible that there will be renewed deterioration in the real estate market generally and in commercial real estate values in particular. Such developments may result in additional loan charge-offs and provisions for loan losses, which may have a material and adverse effect on our net income and capital levels.
Our commercial loan and commercial real estate loan portfolios expose us to risks that may be greater than the risks related to our other loans. Our loan portfolio includes commercial loans and commercial real estate loans, which are secured by hotels and motels, shopping/retail centers, service station and car wash, industrial and warehouse properties, and other types of commercial properties. Commercial and commercial real estate loans carry more risk as compared to other types of lending, because they typically involve larger loan balances often concentrated with a single borrower or groups of related borrowers.
Accordingly, charge-offsrisks. Charge-offs on commercial and commercial real estate loans may be larger on a per loan basis than those incurred with our residential or consumer loan portfolios. In addition, these loans expose a lender to greater credit risk than loans secured by residential real estate. The payment experience on commercial real estate loans that are secured by income producing properties are typically dependent on the successful operation of the related real estate projectproperty tenants and thus, may subject us to adverse conditions in the real estate market or to the general economy. The collateral securing these loans typically cannot be liquidated as easily as residential real estate. If we foreclose on these loans, our holding period for the collateral typically is longer than residential properties because there are fewer potential purchasers of the collateral.
Unexpected deterioration in the credit quality of our commercial or commercial real estate loan portfolios would require us to increase our provision for loancredit losses, which would reduce our profitability and could materially adversely affect our business, financial condition, results of operations and prospects.
In addition, with respect to commercial real estate loans, federal and state banking regulators have expressed concerns about weakness in the commercial real estate market. As a result, banking regulators are examining commercial real estate lending activity with heightened scrutiny and may require banks with higher levels of commercial real estate loans to implement more stringent underwriting, internal controls, risk management policies and portfolio stress testing, as well as possibly higher levels of allowances for losses and capital levels as a result of commercial real estate lending growth and exposures. Because a significant portion of our loan portfolio is comprised of commercial real estate loans, the banking regulators may require us to maintain higher levels of capital than we would otherwise be expected to maintain, which could limit our ability to leverage our capital and have a material adverse effect on our business, financial condition, results of operations and prospects.


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Our allowance for loancredit losses may not cover our actual loan losses. As a lender, we are exposed to the risk that the principal of, or interest on, a loan will not be paid timely or at all or that the value of any collateral supporting a loan will be insufficient to cover our outstanding exposure. In accordance with U.S. GAAP, we maintain an allowance for credit losses to provide for loan defaults and non-performance. If our actual loancredit losses exceed the amount we have allocated for estimated probable incurredcurrent expected credit losses, our business will be adversely affected. We attempt to limit the risk that borrowers will fail to repay loans by carefully underwriting our loans, but losses nevertheless occur in the ordinary course of business operations. We create allowances for estimated loancredit losses through provisions that are recorded as reductions in income in our accounting records. We base these allowances on estimates of the following:
•historical experience with our loans;
•evaluation of current economic conditions and other factors;
•reviews of the quality, mix and size of the overall loan portfolio;
•reviews of delinquencies; and
•the quality of the collateral underlying our loans.
If our allowance estimates are inadequate, we may incur losses, our financial condition may be materially and adversely affected and we may be required to try and raise additional capital to enhance our capital position. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the adequacy of our allowance. These agencies may require us to establish additional allowances based on their judgment of the information available at the time of their examinations. No assurance can be given that we will not sustain loan losses in excess of present or future levels of the allowance for loancredit losses or that regulatory agencies will not require us to increase our allowance thereby impacting our profitability.
An increase in nonperforming assets would reduce our income and increase our expenses. If the level of nonperforming assets increases in the future, it may adversely affect our operating results and financial condition. Nonperforming assets are mainly loans on which the borrowers are not making their required payments. Nonperforming assets also include loans that have been restructured to permit the borrower to make payments and real estate that has been acquired through foreclosure or deed in lieu of foreclosure of unpaid loans. To the extent that assets are nonperforming, we would have a lower balance of earning assets generating interest income and an increase in credit related expenses, including provisions for credit losses.
Increases in the level of our problem assets, occurrence of operating losses or a failure to comply with requirements of the agencies which regulate us may result in regulatory actions against us which may materially and adversely affect our business and the market price of our common stock. The DFPI, the FDIC, and the FRB each have authority to take actions to require that we comply with applicable regulatory capital requirements, cease engaging in what they perceive to be unsafe or unsound practices or make other changes in our business. Among others, the corrective measures that such regulatory authorities may take include requiring us to enter into informal or formal agreements regarding our operations, the issuance of cease and desist orders to refrain from engaging in unsafe and unsound practices, removal of officers and directors and the assessment of civil monetary penalties. See Item 1 “Business – Supervision and Regulation” for a further description of such regulatory powers.
Our use of appraisals in deciding whether to make loans secured by real property does not ensure that the value of the real property collateral will be sufficient to repay our loans. In considering whether to make a loan secured by real property, we require an appraisal of the property. However, an appraisal is only an estimate of the value of the property at the time the appraisal is made and requires the exercise of a considerable degree of judgment. If the appraisal does not accurately reflect the amount that may be obtained upon sale or foreclosure of the property, whether due to a decline in property value after the date of the original appraisal or defective preparation of the appraisal, we may not realize an amount equal to the indebtedness secured by the property and as a result, we may suffer losses.
Changes in interest rates affect our profitability. The interest rate risk inherent in our lending, investing, and deposit taking activities is a significant market risk to us and our business. We derive our income mainly from the difference or “spread” between the interest earned on loans, securities and other interest earning assets, and interest paid on deposits, borrowings and other interest bearing liabilities. In general, the wider the spread, the more net interest income we earn. When market rates of interest change, the interest we receive on our assets and the interest we pay on our liabilities will fluctuate. This can cause decreases in our spread and can greatly affect our income. In addition, interest rate fluctuations can affect how much money we may be able to lend. There can be no assurance that we will be successful in minimizing the potentially adverse effects of changes in interest rates.
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If we lose key employees, our business may suffer. suffer. There is intense competition for experienced and highly qualified personnel in the Korean-American banking industry and the banking industry more broadly.industry. Our future success depends on the continued employment of existing senior management personnel. If we lose key employees temporarily or permanently, it may hurt our business. We may be particularly hurt if our key employees, including any of our executive officers, became employed by our competitorsdirect competitors.
We are exposed to the risks of natural disasters. A significant portion of our operations are concentrated in Southern California, which is an earthquake and fire prone region. A major earthquake or fire may result in material loss to us. A significant percentage of our loans are and will be secured by real estate. Many of our borrowers may suffer uninsured property damage, experience interruption of their businesses or lose their jobs after an earthquake or fire. Those borrowers might not be able to repay their loans, and the collateral for such loans may decline significantly in value. Unlike a bank with operations that are more geographically diversified, we are vulnerable to greater losses if an earthquake, fire, flood, mudslide or other natural catastrophe occurs in Southern California.
We may experience adverse effects from acquisitions. We have acquired other banking companies and bank offices in the Korean-Americanpast, and will consider additional acquisitions as opportunities arise. If we do not adequately address the financial and operational risks associated with acquisitions of other companies, we may incur material unexpected costs and disruption of our business. Future acquisitions may increase the degree of such risks.
Risks involved in acquisitions of other companies include:
•the risk of failure to adequately evaluate the asset quality of the acquired company;
•difficulty in assimilating the operations, technology and personnel of the acquired company;
•diversion of management’s attention from other important business activities;
•difficulty in maintaining good relations with the loan and deposit customers of the acquired company;
•inability to maintain uniform and effective operating standards, controls, procedures and policies;
•potentially dilutive issuances of equity securities or the incurrence of debt and contingent liabilities; and
•amortization of expenses related to acquired intangible assets that have finite lives.
Liquidity risks may impair our ability to fund operations and jeopardize our financial condition. Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans, and other sources may have a material adverse effect on our liquidity. Our access to funding sources in amounts adequate to finance our activities may be impaired by factors that affect us specifically or the financial services industry in general. Factors that may detrimentally impact our access to liquidity sources include a decrease in the level of our business activity due to a market downturn or adverse regulatory action against us. Our ability to acquire deposits or borrow may also be impaired by factors that are not specific to us, such as a disruption of the financial markets or negative views and expectations about the prospects for the banking industry.industry or the general financial services industry as a whole.
Fraudulent activity or breaches or failures of our information system controls, including those related to cybersecurity incidents, could have a material adverse effect on our business. As a financial institution, we are susceptible to fraudulent activity and security breaches, including those related to cybersecurity incidents, that may materially and adversely affect us or our clients or our third-party service providers. Fraudulent activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering, and other dishonest acts. Information system breaches and other cybersecurity threats may include fraudulent or unauthorized access to systems used by us or our clients, denial or degradation of service attacks, and ransomware or other cyber-attacks. There continues to be a rise in electronic fraudulent activity, security breaches, and cyber-attacks within the financial services industry, especially in the commercial banking sector due to cyber criminals targeting commercial bank accounts. Consistent with industry trends, we have also experienced an increase in attempted electronic fraudulent activity and information system breaches in recent periods.
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As a financial institution, we receive and maintain the business and personal information of our customers on a daily basis. Information pertaining to us and our clients is maintained, and transactions are executed, on the networks and information systems owned or used by us, our clients and certain of our third-party service providers, such as our online banking or reporting systems. The secure maintenance and transmission of confidential information, as well as execution of transactions over these information systems, are essential to protect us and our clients against fraud and security breaches and to maintain our clients’ confidence. We face the risk that this information may be fraudulently or otherwise improperly accessed, used or disclosed in a cyber-attack or other security breach of the information systems we rely upon. Large corporations, including financial institutions and retail companies, have increasingly suffered major cybersecurity incidents relating to information system breaches, in some cases exposing not only confidential and proprietary corporate information, but also sensitive financial and other personal information of their customers and employees and subjecting them to potential fraudulent activity. In the ordinary course of our business, we have experienced and expect to continue to experience cyber-based attacks and other cybersecurity threats that may compromise our information systems, the consequences of which could be material and adverse.
Our inability to anticipate or adequately mitigate against fraudulent activity, cybersecurity incidents and other security breaches may result in financial losses, litigation, increased regulatory scrutiny or supervisory actions and/or damage to our reputation, any of which may be material.
We rely on technology and information systems that may be disrupted, which would pose operational risks. Our business depends on the continuous operation of our information and data processing systems and related operational infrastructure, some of which are provided by third party vendors. We rely on these systems for, among other things, communications, processing customer transactions, recordkeeping and financial controls. The failure of any of these resources, including but not limited to failures due to cybersecurity incidents, operational or systems failures, interruptions of client service operations or interruptions in third party data processing or other vendor support, may cause material disruptions in our business, impairment of customer relations, exposure to our customers for liability, reputational harm and action by bank regulatory authorities. Breaches of the information systems owned or used by us also may occur, and on occasion have occurred, through intentional or unintentional acts by those having access to our systems or our clients’ or counterparties’ confidential information, including employees. In addition, increases in criminal activity, and the levels and sophistication of the same, advances in computer capabilities, vulnerabilities in third-party technologies (including browsers and operating systems) and other developments could result in a compromise or breach of the technology, processes and controls that we use in the operation of our business, which could have a material and adverse effect on our business, results of operation and financial condition.
Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks. Companies are facing increasing scrutiny from customers, regulators, investors, investor advocacy groups, and other stakeholders related to their ESG practices and disclosure, especially as they relate to the environment, health and safety, diversity, labor conditions, and human rights. Increased ESG related compliance costs could result in increases to our overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, and our financial condition and results of operations. New government regulations could also result in new or more stringent forms of ESG oversight and expand mandatory and voluntary reporting, diligence, and disclosure. Additionally, concerns over the long-term impacts of climate change have led and could continue to lead to governmental efforts around the world to mitigate those impacts. Consumers and businesses also may change their behavior on their own as a result of these concerns. We, along with our customers, will need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns. We may also face cost increases, asset value reductions, and operating process changes, among other impacts. In addition, we could face reductions in creditworthiness on the part of some customers or in the value of assets securing loans.
Our business reputation is important and any damage to it may have a material adverse effect on our business. Our reputation is very important for our business, as we rely on our relationships with our current, former, and potential clients and stockholders in the communities we serve. Any damage to our reputation, whether arising from regulatory, supervisory or enforcement actions, matters affecting our financial reporting or compliance with SEC and exchange listing requirements, negative publicity, our conduct of our business or otherwise may have a material adverse effect on our business.
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As we expand outside our traditional geographic markets, we may encounter additional risks that may adversely affect us. Currently, the majority of our offices are located in California, but we also have offices in the greater New York City, Chicago, Houston, Dallas, Tampa, and Seattle metropolitan areas, New Jersey, Virginia, Colorado, Georgia, and Alabama. Over time, we may seek to establish offices in other parts of the United States as well. We may encounter significant risks, including unfamiliarity with the characteristics and business dynamics of new markets, increased marketing and administrative expenses and operational difficulties arising from our efforts to attract business in new markets, manage operations in noncontiguous geographic markets, comply with local laws and regulations and effectively and consistently manage our non-California personnel and business. If we are unable to manage these risks, our operations may be materially and adversely affected.
Adverse conditions in South Korea or globally may adversely affect our business. A substantial number of our customers have economic and cultural ties to South Korea and, as a result, we are likely to feel the effects of adverse economic and political conditions there. If economic or political conditions in South Korea deteriorate, we may, among other things, be exposed to economic and transfer risk, and may experience an outflow of deposits by our customers with connections to South Korea. Transfer risk may result when an entity is unable to obtain the foreign exchange needed to meet its obligations or to provide liquidity. This may materially and adversely impact the recoverability of investments in or loans made to such entities. Adverse economic conditions in South Korea may also negatively impact asset values and the profitability and liquidity of our customers who operate in this region. In addition, a general overall decline in global economic conditions may materially and adversely affect our profitability and overall results of operations.
Legal and Regulatory Risks
Governmental regulation and regulatory actions against us may further impair our operations or restrict our growth. We are subject to significant governmental supervision and regulation. These regulations affect our lending practices, capital structure, investment practices, dividend policy and growth, among other things. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. Statutes and regulations affecting our business may be changed at any time and the interpretation of these statutes and regulations by examining authorities may also change. In addition, regulations may be adopted which increase our deposit insurance premiums and enact special assessments which could increase expenses associated with running our business and adversely affect our earnings.
There can be no assurance that such statutes and regulations, any changes thereto or to their interpretation will not adversely affect our business. In particular, these statutes and regulations, and any changes thereto, could subject us to additional costs (including legal and compliance costs), limit the types of financial services and products we may offer and/or increase the ability of non-banks to offer competing financial services and products, among other things. In addition to governmental supervision and regulation, we are subject to changes in other federal and state laws, including changes in tax laws, which could materially affect us and the banking industry generally. We are subject to the rules, regulations of, and examination by the FRB, the FDIC, the DFPI, and the CFPB. In addition, we are subject to the rules and regulation of the Nasdaq Stock Market and the SEC and are subject to enforcement actions and other punitive actions by these agencies. If we fail to comply with federal and state regulations, the regulators may limit our activities or growth, impose fines on us or in the case of our bank regulators, ultimately require our bank to cease its operations. Bank regulations can hinder our ability to compete with financial services companies that are not regulated in the same manner or are less regulated. Federal and state bank regulatory agencies regulate many aspects of our operations. These areas include:
•the capital that must be maintained;
•the kinds of activities that can be engaged in;
•the kinds and amounts of investments that can be made;
•the locations of offices;
•insurance of deposits and the premiums that we must pay for this insurance;
•procedures and policies we must adopt;
•conditions and restrictions on our executive compensation; and
•how much cash we must set aside as reserves for deposits.
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In addition, bank regulatory authorities have the authority to bring enforcement actions against banks and bank holding companies, including the Bank and Hope Bancorp, for unsafe or unsound practices in the conduct of their businesses or for violations of any law, rule or regulation, any condition imposed in writing by the appropriate bank regulatory agency or any written agreement with the authority. Enforcement actions against us could include a federal conservatorship or receivership for the bank, the issuance of additional orders that could be judicially enforced, the imposition of civil monetary penalties, the issuance of directives to enter into a strategic transaction, whether by merger or otherwise, with a third party, the termination of insurance of deposits, the issuance of removal and prohibition orders against institution-affiliated parties, and the enforcement of such actions through injunctions or restraining orders. In addition, as we have grown over $10 billion in assets, we are subject to enhanced CFPB examination and required to perform more comprehensive stress-testing on our business and operations.
We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations. The BSA, the USA PATRIOT Act of 2001, the Anti-Money Laundering Act of 2020, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate. The federal Financial Crimes Enforcement Network is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration, and Internal Revenue Service. We are also subject to increased scrutiny of compliance with the rules enforced by the Office of Foreign Assets Control and compliance with the Foreign Corrupt Practices Act. If our policies, procedures and systems are deemed deficient, we would be subject to liability, including fines and regulatory actions, on our ability to engage in expansionary activities, such as mergers and acquisitions, and restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us. Any of these results could materially and adversely affect our business, financial condition and results of operations.
SBA lending is an important part of our business. Our SBA lending program is dependent upon the federal government, and we face specific risks associated with originating SBA loans. Our SBA lending program is dependent upon the federal government. As an SBA Preferred Lender, we enable our clients to obtain SBA loans without being subject to the potentially lengthy SBA approval process required for lenders that are not SBA Preferred Lenders. The SBA periodically reviews the lending operations of participating lenders to assess, among other things, whether the lender exhibits prudent risk management. When weaknesses are identified, the SBA may request corrective actions or impose enforcement actions, including revocation of the lender’s Preferred Lender status. If we lose our status as a Preferred Lender, we may lose some or all of our customers to lenders who are SBA Preferred Lenders, and as a result we could experience a material adverse effect to our financial results. Any changes to the SBA program, including changes to the level of guarantee provided by the federal government on SBA loans, may also have a material adverse effect on our business.
The sales of SBA 7(a) loans results in both premium income at the time of sale and a stream of future servicing income. We may not be able to continue originating these loans or selling them in the secondary market. Furthermore, even if we are able to continue originating and selling SBA 7(a) loans in the secondary market, we might not continue to realize premiums upon the sale of the guaranteed portion of these loans. When we sell the guaranteed portion of our SBA 7(a) loans, we incur credit risk on the non-guaranteed portion of the loans, and if a customer defaults on the non-guaranteed portion of a loan, we share any loss and recovery related to the loan pro-rata with the SBA. If the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced by us, the SBA may seek recovery of the principal loss related to the deficiency from us, which could materially adversely affect our business, financial condition, results of operations and prospects.
The laws, regulations and standard operating procedures that are applicable to SBA loan products may change in the future. We cannot predict the effects of these changes on our business and profitability. Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies and especially our organization, changes in the laws, regulations and procedures applicable to SBA loans could adversely affect our ability to operate profitably.
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Environmental laws may force us to pay for environmental problems. The cost of cleaning up or paying damages and penalties associated with environmental problems may increase our operating expenses. When a borrower defaults on a loan secured by real property, we often purchase the property in foreclosure or accept a deed to the property surrendered by the borrower. We may also take over the management of commercial properties whose owners have defaulted on loans. We also lease premises where our branches and other facilities are located, all where environmental problems may exist. Although we have lending, foreclosure and facilities guidelines that are intended to exclude properties with an unreasonable risk of contamination, hazardous substances may exist on some of the properties that we own, lease, manage or occupy. We may face the risk that environmental laws may force us to clean up the properties at our expense. The cost of cleaning up a property may exceed the value of the property. We may also be liable for pollution generated by a borrower’s operations if we take a role in managing those operations after a default. We may find it difficult or impossible to sell contaminated properties.
We are exposed to the risks of natural disasters. A significant portion of our operations is concentrated in Southern California, which is an earthquake and fire prone region. A major earthquake or fire may result in material loss to us. A significant percentage of our loans are and will be secured by real estate. Many of our borrowers may suffer uninsured property damage, experience interruption of their businesses or lose their jobs after an earthquake or fire. Those borrowers might not be able to repay their loans, and the collateral for such loans may decline significantly in value. Unlike a bank with operations that are more geographically diversified, we are vulnerable to greater losses if an earthquake, fire, flood, mudslide or other natural catastrophe occurs in Southern California.
An increase in nonperforming assets would reduce our income and increase our expenses. If the level of nonperforming assets increases in the future, it may adversely affect our operating results and financial condition. Nonperforming assets are mainly loans on which the borrowers are not making their required payments. Nonperforming assets also include loans that have been restructured to permit the borrower to make payments and real estate that has been acquired through foreclosure or deed in lieu of foreclosure of unpaid loans. To the extent that assets are nonperforming, we have less earning assets generating interest income and an increase in credit related expenses, including provisions for loan losses.
We may experience adverse effects from acquisitions. We have acquired other banking companies and bank offices in the past, and will consider additional acquisitions as opportunities arise. If we do not adequately address the financial and operational

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risks associated with acquisitions of other companies, we may incur material unexpected costs and disruption of our business. Future acquisitions may increase the degree of such risks.

Risks involved in acquisitions of other companies include:
the risk of failure to adequately evaluate the asset quality of the acquired company;
difficulty in assimilating the operations, technology and personnel of the acquired company;
diversion of management’s attention from other important business activities;
difficulty in maintaining good relations with the loan and deposit customers of the acquired company;
inability to maintain uniform and effective operating standards, controls, procedures and policies;
potentially dilutive issuances of equity securities or the incurrence of debt and contingent liabilities; and
amortization of expenses related to acquired intangible assets that have finite lives.
Liquidity risks may impair our ability to fund operations and jeopardize our financial condition. Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans, and other sources may have a material adverse effect on our liquidity. Our access to funding sources in amounts adequate to finance our activities may be impaired by factors that affect us specifically or the financial services industry in general. Factors that may detrimentally impact our access to liquidity sources include a decrease in the level of our business activity due to a market downturn or adverse regulatory action against us. Our ability to acquire deposits or borrow may also be impaired by factors that are not specific to us, such as a disruption of the financial markets or negative views and expectations about the prospects for the banking industry or the general financial services industry as a whole.
Increases in the level of our problem assets, occurrence of operating losses or a failure to comply with requirements of the agencies which regulate us may result in regulatory actions against us which may materially and adversely affect our business and the market price of our common stock. The DBO, the FDIC, and the FRB each have authority to take actions to require that we comply with applicable regulatory capital requirements, cease engaging in what they perceive to be unsafe or unsound practices or make other changes in our business. Among others, the corrective measures that such regulatory authorities may take include requiring us to enter into informal or formal agreements regarding our operations, the issuance of cease and desist orders to refrain from engaging in unsafe and unsound practices, removal of officers and directors and the assessment of civil monetary penalties. See “Item 1. Business – Supervision and Regulation” for a further description of such regulatory powers.
Changes in accounting standards may affect how we record and report our financial condition and results of operations. Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. From time to time, the Financial Accounting Standards Board and SEC change the financial accounting and reporting standards that govern the preparation of our financial statements. These changes and their impacts on us can be hard to predict and may result in unexpected and materially adverse impacts on our reported financial condition and results of operations.
Financial and Market Risks
We facemay reduce or discontinue the payment of dividends on common stock. Our stockholders are only entitled to receive such dividends as our board of directors (the “Board”) may declare out of funds legally available for such payments. Although we have historically declared cash dividends on our common stock, we are not required to do so and may need to reduce or eliminate our common stock dividend in the future. Our ability to pay dividends to our stockholders is subject to the restrictions set forth in Delaware law, by the FRB, and by certain covenants contained in our subordinated debentures. Notification to the FRB is also required prior to our declaring and paying a risk of noncompliance and enforcement action withcash dividend to our stockholders during any period in which our quarterly and/or cumulative twelve-month net earnings are insufficient to fund the dividend amount, among other requirements. We may not pay a dividend if the FRB objects or until such time as we receive approval from the FRB or we no longer need to provide notice under applicable regulations. In addition, we often rely on cash distributions from the Bank Secrecy Act and other anti-money laundering statutes and regulations. to fund dividends to our stockholders. The Bank Secrecy Act, the USA PATRIOT Act of 2001, and other laws and regulations require financial institutions, among other duties,Bank’s ability to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate. The federal Financial Crimes Enforcement Networkmake cash distributions to Hope Bancorp is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration, and Internal Revenue Service. We are also subject to increased scrutiny of compliance with the rules enforced byrestrictions set forth under the Office of Foreign Assets ControlCalifornia Financial Code and compliance with the Foreign Corrupt Practices Act. If our policies, procedures and systems are deemed deficient, we would also be subject to liability, including fines and regulatoryprior approval or restriction by the DFPI if the distribution by the Bank exceeds the lesser of (a) the retained earnings of the Bank or (b) three fiscal years net income, less distributions made by the Bank during such period. We cannot provide assurance that the Bank will be able to continue making cash distributions to Hope Bancorp, which could in turn, affect our ability to continue paying dividends on our common stock. The Bank may not be able to distribute cash to us if the DFPI objects or until such time as the Bank receives approval from the DFPI or the Bank no longer needs to obtain approval under applicable regulations. Further, the Bank may be restricted by applicable law or regulation or actions taken by its regulators, now or in the future, from making cash distributions to Hope Bancorp, which may include restrictions oncould, in turn, adversely impact our ability to pay dividends andto our stockholders. Likewise, we may be restricted by applicable law or regulation or actions taken by our regulators, now or in the necessityfuture, from paying dividends to obtain regulatory approvals to proceed with certain aspectsour stockholders. Lastly, we cannot provide assurance that we will continue paying dividends on our common stock at current levels or at all. A reduction or discontinuance of dividends on our business plan. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us. Any of these results could materially and adversely affect our business, financial condition and results of operations.
The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidentscommon stock could have a material adverse effect on our business. As a financial institution,business, including the market price of our common stock.
The value of our securities in our investment portfolio may decline in the future. The fair value of our investment securities may be adversely affected by market conditions, including changes in interest rates, implied credit spreads, and the occurrence of any events adversely affecting the issuer of particular securities in our investments portfolio or any given market segment or industry in which we are susceptibleinvested. We analyze our securities available for sale on a quarterly basis to fraudulent activity, information security breachesdetermine if there is a requirement to recognize current expected credit losses. The process for determining current expected credit losses usually requires complex, subjective judgments about the future financial performance of the issuer in order to assess the probability of receiving all contractual principal and cybersecurity-related incidents thatinterest payments sufficient to recover our amortized cost of the security. Because of changing economic and market conditions affecting issuers, we may be committed against us or our clients, which may resultrequired to recognize credit losses in financial losses or increased costs to us or our clients, disclosure or misuse of our information or our client information, misappropriation of assets, privacy breaches against our clients, litigation, or damage to our reputation. Such fraudulent activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering, and other dishonest acts. Information security breaches and cybersecurity-related incidents may include fraudulent or unauthorized access to systems used by us or our clients, denial or degradation of service attacks, and malware, or other cyber-

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attacks. In recentfuture periods, there continues to be a rise in electronic fraudulent activity, security breaches, and cyber-attacks within the financial services industry, especially in the commercial banking sector due to cyber criminals targeting commercial bank accounts. Consistent with industry trends, we have also experienced an increase in attempted electronic fraudulent activity, security breaches and cybersecurity-related incidents in recent periods. Moreover, in recent periods, several large corporations, including financial institutions and retail companies, have suffered major data breaches, in some cases exposing not only confidential and proprietary corporate information, but also sensitive financial and other personal information of their customers and employees and subjecting them to potential fraudulent activity. Some of our clients may have been affected by these breaches, which increase their risks of identity theft, credit card fraud and other fraudulent activity that could involve their accounts with us.
Information pertaining to us and our clients is maintained, and transactions are executed, on the networks and systems of us, our clients and certain of our third party partners, such as our online banking or reporting systems. The secure maintenance and transmission of confidential information, as well as execution of transactions over these systems, are essential to protect us and our clients against fraud and security breaches and to maintain our clients’ confidence. Breaches of information security also may occur, and in infrequent cases have occurred, through intentional or unintentional acts by those having access to our systems or our clients’ or counterparties’ confidential information, including employees. In addition, increases in criminal activity, levels and sophistication, advances in computer capabilities, new discoveries, vulnerabilities in third-party technologies (including browsers and operating systems) or other developments could result in a compromise or breach of the technology, processes and controls that we use to prevent fraudulent transactions and to protect data about us, our clients and underlying transactions, as well as the technology used by our clients to access our systems. Although we have developed, and continue to invest in, systems and processes that are designed to detect and prevent security breaches and cyber-attacks and periodically test our security, our inability to anticipate, or failure to adequately mitigate, breaches of security could result in: losses to us or our clients; our loss of business and/or clients; damage to our reputation; the incurrence of additional expenses; disruption to our business; our inability to grow our online services or other businesses; additional regulatory scrutiny or penalties; or our exposure to civil litigation and possible financial liability - any of which could have a material adverse effect on our business, financial condition, andor results of operations.
More generally, publicized information concerning security and cyber-related problems could inhibit the use or growth of electronic or web-based applications or solutions as a means of conducting commercial transactions. Such publicity may also cause damage to our reputation as a financial institution. As a result, our business, financial condition and results of operations could be adversely affected.
We are subject to operational risks relating to our technology and information systems. The continued efficacy of our technology and information systems, related operational infrastructure and relationships with third party vendors in our ongoing operations is integral to our performance. Failure of any of these resources, including but not limited to operational or systems failures, interruptions of client service operations and ineffectiveness of or interruption in third party data processing or other vendor support, may cause material disruptions in our business, impairment of customer relations and exposure to liability for our customers, as well as action by bank regulatory authorities.
Our business reputation is important and any damage to it may have a material adverse effect on our business. Our reputation is very important for our business, as we rely on our relationships with our current, former, and potential clients and stockholders in the communities we serve. Any damage to our reputation, whether arising from regulatory, supervisory or enforcement actions, matters affecting our financial reporting or compliance with SEC and exchange listing requirements, negative publicity, our conduct of our business or otherwise may have a material adverse effect on our business.
As we expand outside our California markets, we may encounter additional risks that may adversely affect us. Currently, the majority of our offices are located in California, but we also have offices in the New York City, Chicago, Houston, Dallas, and Seattle metropolitan areas, New Jersey, Virginia, Alabama, and Georgia. Over time, we may seek to establish offices to serve Korean-American communities in other parts of the United States as well. In the course of these expansion activities, we may encounter significant risks, including unfamiliarity with the characteristics and business dynamics of new markets, increased marketing and administrative expenses and operational difficulties arising from our efforts to attract business in new markets, manage operations in noncontiguous geographic markets, comply with local laws and regulations and effectively and consistently manage our non-California personnel and business. If we are unable to manage these risks, our operations may be materially and adversely affected.

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Adverse conditions in South Korea or globally may adversely affect our business. A substantial number of our customers have economic and cultural ties to South Korea and, as a result, we are likely to feel the effects of adverse economic and political conditions there. If economic or political conditions in South Korea deteriorate, we may, among other things, be exposed to economic and transfer risk, and may experience an outflow of deposits by our customers with connections to South Korea. Transfer risk may result when an entity is unable to obtain the foreign exchange needed to meet its obligations or to provide liquidity. This may materially and adversely impact the recoverability of investments in or loans made to such entities. Adverse economic conditions in South Korea may also negatively impact asset values and the profitability and liquidity of our customers who operate in this region. In addition, a general overall decline in global economic conditions may materially and adversely affect our profitability and overall results of operations.
Our use of appraisals in deciding whether to make loans secured by real property does not ensure that the value of the real property collateral will be sufficient to repay our loans. In considering whether to make a loan secured by real property, we require an appraisal of the property. However, an appraisal is only an estimate of the value of the property at the time the appraisal is made and requires the exercise of a considerable degree of judgment. If the appraisal does not accurately reflect the amount that may be obtained upon sale or foreclosure of the property, whether due to a decline in property value after the date of the original appraisal or defective preparation of the appraisal, we may not realize an amount equal to the indebtedness secured by the property and as a result, we may suffer losses.
Governmental regulation and regulatory actions against us may further impair our operations or restrict our growth. We are subject to significant governmental supervision and regulation. These regulations affect our lending practices, capital structure, investment practices, dividend policy and growth, among other things. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. Statutes and regulations affecting our business may be changed at any time and the interpretation of these statutes and regulations by examining authorities may also change. In addition, regulations may be adopted which increase our deposit insurance premiums and enact special assessments which could increase expenses associated with running our business and adversely affect our earnings.
There can be no assurance that such statutes and regulations, any changes thereto or to their interpretation will not adversely affect our business. In particular, these statutes and regulations, and any changes thereto, could subject us to additional costs (including legal and compliance costs), limit the types of financial services and products we may offer and/or increase the ability of non-banks to offer competing financial services and products, among other things. In addition to governmental supervision and regulation, we are subject to changes in other federal and state laws, including changes in tax laws, which could materially affect us and the banking industry generally. We are subject to the rules and regulations of the FRB, the FDIC and the DBO, and examination by the CFPB. In addition, we are subject to the rules and regulation of the Nasdaq Stock Market and the SEC and are subject to enforcement actions and other punitive actions by these agencies. If we fail to comply with federal and state regulations, the regulators may limit our activities or growth, impose fines on us or in the case of our bank regulators, ultimately require our bank to cease its operations. Bank regulations can hinder our ability to compete with financial services companies that are not regulated in the same manner or are less regulated. Federal and state bank regulatory agencies regulate many aspects of our operations. These areas include:
the capital that must be maintained;
the kinds of activities that can be engaged in;
the kinds and amounts of investments that can be made;
the locations of offices;
insurance of deposits and the premiums that we must pay for this insurance;
procedures and policies we must adopt;
conditions and restrictions on our executive compensation; and
how much cash we must set aside as reserves for deposits.
In addition, bank regulatory authorities have the authority to bring enforcement actions against banks and bank holding companies, including the Bank and Hope Bancorp, for unsafe or unsound practices in the conduct of their businesses or for violations of any law, rule or regulation, any condition imposed in writing by the appropriate bank regulatory agency or any written agreement with the authority. Enforcement actions against us could include a federal conservatorship or receivership for the bank, the issuance of additional orders that could be judicially enforced, the imposition of civil monetary penalties, the issuance of directives to enter into a strategic transaction, whether by merger or otherwise, with a third party, the termination of insurance of deposits, the issuance of removal and prohibition orders against institution-affiliated parties, and the enforcement of such actions through injunctions or restraining orders. In addition, as we have grown beyond $10 billion in assets, we are subject to enhanced CFPB examination as well as required to perform more comprehensive stress-testing on our business and operations.

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SBA lending is an important part of our business. Our SBA lending program is dependent upon the federal government, and we face specific risks associated with originating SBA loans. Our SBA lending program is dependent upon the federal government. As an SBA Preferred Lender, we enable our clients to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not SBA Preferred Lenders. The SBA periodically reviews the lending operations of participating lenders to assess, among other things, whether the lender exhibits prudent risk management. When weaknesses are identified, the SBA may request corrective actions or impose enforcement actions, including revocation of the lender’s Preferred Lender status. If we lose our status as a Preferred Lender, we may lose some or all of our customers to lenders who are SBA Preferred Lenders, and as a result we could experience a material adverse effect to our financial results. Any changes to the SBA program, including changes to the level of guarantee provided by the federal government on SBA loans, may also have a material adverse effect on our business.
We generally sell the guaranteed portion of our SBA 7(a) loans in the secondary market. These sales have resulted in both premium income for us at the time of sale, and created a stream of future servicing income. We may not be able to continue originating these loans or selling them in the secondary market. Furthermore, even if we are able to continue originating and selling SBA 7(a) loans in the secondary market, we might not continue to realize premiums upon the sale of the guaranteed portion of these loans. When we sell the guaranteed portion of our SBA 7(a) loans, we incur credit risk on the non-guaranteed portion of the loans, and if a customer defaults on the non-guaranteed portion of a loan, we share any loss and recovery related to the loan pro-rata with the SBA. If the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced by us, the SBA may seek recovery of the principal loss related to the deficiency from us, which could materially adversely affect our business, financial condition, results of operations and prospects.
The laws, regulations and standard operating procedures that are applicable to SBA loan products may change in the future. We cannot predict the effects of these changes on our business and profitability. Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies and especially our organization, changes in the laws, regulations and procedures applicable to SBA loans could adversely affect our ability to operate profitably.
Our stock price may be volatile, which may result in substantial losses for our stockholders. The market price of our common stock may be subject to fluctuations in response to a number of factors, including:
issuing new equity securities;
the amount of our common stock outstanding and the trading volume of our stock;
actual or anticipated changes in our future financial performance;
changes in financial performance estimates by us or by securities analysts;
competitive developments, including announcements by us or our competitors of new products or services or acquisitions, strategic partnerships, joint ventures or capital commitments;
the operating and stock performance of our competitors;
changes in interest rates;
changes in key personnel;
changes in economic conditions that affect the Bank’s performance; and
changes in legislation or regulations that affect the Bank.

We may raise additional capital, which could have a dilutive effect on the existing holders of our common stock and adversely affect the market price of our common stock. We periodically evaluate opportunities to access capital markets, taking into account our financial condition, regulatory capital ratios, business strategies, anticipated asset growth and other relevant considerations. It is possible that future acquisitions, organic growth or changes in regulatory capital requirements could require us to increase the amount or change the composition of our current capital, including our common equity. For all of these reasons and others, and always subject to market conditions, we may issue additional shares of common stock or other capital securities in public or private transactions.
The issuance of additional common stock or securities convertible into or exchangeable for our common stock or that represent the right to receive common stock, or the exercise of such securities, could be substantially dilutive to holders of our common stock. Holders of our common stock have no preemptive or other rights that would entitle them to purchase their pro rata share of any offering of shares of any class or series and, therefore, such sales or offerings could result in dilution of the ownership interests of our stockholders.
Our ability to declare and pay dividends in the future, as well as the ability of the Bank to make dividend payments to us, will be subject to regulatory, statutory and other restrictions. There can be no assurance that we will continue payment of regular cash dividends. Our ability to pay dividends at that time will be subject to statutory and other limitations applicable to us or to the Bank.

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Our results of operations or financial condition could be adversely affected as a result of future impairment of our intangible assets. Future acquisitions could result in increases in the amount of our goodwill or other intangible assets. We assess the carrying value of intangible assets, including goodwill, at least annually in order to determine whether such assets are impaired. We make a qualitative assessment of whether it is more likely than not that the fair value of goodwill or other intangible assets is less than its carrying amount.
If we fail to maintain an effective system of internal controls and disclosure controls and procedures, we may not be able to accurately report our financial results or prevent fraud. Effective internal control over financial reporting and disclosure controls and procedures are necessary for us to provide reliable financial reports, effectively prevent fraud and to operate successfully as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and business would be harmed. In addition, failure in our internal control over financial reporting and disclosure controls and procedures could cause us to fail to meet the continued listing requirements of the Nasdaq Global Select Market and, as a result, adversely impact the liquidity and trading price of our securities.
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Anti-takeover provisions in our charter documents and applicable federal and state law may limit the ability of another party to acquire us, which could cause our stock price to decline. Various provisions of our charter documents could delay or prevent a third-party from acquiring us, even if doing so might be beneficial to our shareholders.stockholders. These include, among other things, advance notice requirements to submit stockholder proposals at stockholder meetings and the authorization to issue “blank check” preferred stock by action of the Board of Directors acting alone, thus without obtaining stockholder approval. In addition, applicable provisions of federal and state banking law require regulatory approval in connection with certain acquisitions of our common stock and supermajority voting provisions in connection with certain transactions. In particular, both federal and state law limit the acquisition of ownership of, generally, 10% or more of our common stock without providing prior notice to the regulatory agencies and obtaining prior regulatory approval or non-objection or being able to rely on an exemption from such requirement. We are also subject to Section 203 of the Delaware General Corporation Law that, subject to exceptions, prohibits us from engaging in any business combinations with any interested stockholder, as defined in that section, for a period of three years following the date on which that stockholder became an interested stockholder. Collectively, these provisions of our charter documents and applicable federal and state law may prevent a merger or acquisition that would be attractive to stockholders and could limit the price investors would be willing to pay in the future for our common stock.
Our common stock is not insured and you could lose the value of your entire investment. An investment in our common stock is not a deposit and is not insured against loss by any government agency.
General Risk Factors
Our common stock is equity and therefore is subordinate to our subsidiaries’ indebtedness and preferred stock. Our common stock constitutes equity interests and does not constitute indebtedness. As such, common stock will rank junior to all current and future indebtedness and other non-equity claims on us with respect to assets available to satisfy claims against us, including in the event of our liquidation. We may, and the bankBank and our other subsidiaries may also, incur additional indebtedness from time to time and may increase our aggregate level of outstanding indebtedness. Additionally, holders of common stock are subject to the prior dividend and liquidation rights of any holders of our preferred stock that may be outstanding from time to time. The Board of Directors is authorized to cause us to issue additional classes or series of preferred stock without any action on the part of our stockholders. If we issue preferred shares in the future that have a preference over our common stock with respect to the payment of dividends or upon liquidation, or if we issue preferred shares with voting rights that dilute the voting power of the common stock, then the rights of holders of our common stock or the market price of our common stock could be materially adversely affected.
Our common stock is not insured and you could lose the value of your entire investment. An investment in our common stock is not a deposit and is not insured against loss by any government agency.
We may fail to realize cost savings from the Wilshire merger. Although we expect to realize cost savings from the merger when fully phased in, it is possible that these potential cost savings may not be realized fully or realized at all, or may take longer to realize than expected. For example, future business developments may require us to continue to operate or maintain some facilities or support functions that are currently expected to be combined or reduced. Cost savings also depend on our ability to combine the businesses of the Company and Wilshire in a manner that permits those costs savings to be realized. If we are not able to combine the two companies successfully, these anticipated cost savings may not be fully realized or realized at all, or may take longer to realize than expected,raise additional capital, which could have a material adversedilutive effect on the existing holders of our common stock and adversely affect the market price of our common stock. We periodically evaluate opportunities to access capital markets, taking into account our financial condition, resultsregulatory capital ratios, business strategies, anticipated asset growth and other relevant considerations. It is possible that future acquisitions, organic growth or changes in regulatory capital requirements could require us to increase the amount or change the composition of operationour current capital, including our common equity. For all of these reasons and others, and always subject to market conditions, we may issue additional shares of common stock price.or other capital securities in public or private transactions.
ImpairmentThe issuance of goodwill resulting prior mergersadditional common stock, debt, or securities convertible into or exchangeable for our common stock or that represent the right to receive common stock, or the exercise of such securities, could be substantially dilutive to holders of our common stock. Holders of our common stock have no preemptive or other rights that would entitle them to purchase their pro rata share of any offering of shares of any class or series and, acquisitions maytherefore, such sales or offerings could result in dilution of the ownership interests of our stockholders.
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Climate change concerns could adversely affect our resultsbusiness and our customers. Concerns over the long-term impacts of operations. Goodwillclimate change have led and could continue to lead to governmental efforts around the world to mitigate those impacts. Climate change presents multi-faceted risks, including operational risk from the physical effects of approximately $464.5 millionclimate events on us; credit risk from borrowers with significant exposure to climate risk; transition risks associated with the transition to a less carbon-dependent economy; and core deposits intangibles of $16.5 million were recordedreputational risk from stakeholder concerns about our practices related to climate change. Consumers and businesses are changing their behavior and business preferences as a result of prior mergersthese concerns. New governmental regulations or guidance relating to climate change, as well as changes in consumers’ and acquisitions. Potential impairmentbusinesses’ behaviors and business preferences, may affect whether and on what terms and conditions we will engage in certain activities or offer certain products or services. The governmental and supervisory focus on climate change could also result in our becoming subject to new or heightened regulatory requirements relating to climate change, such as requirements relating to operational resiliency or stress testing for various climate stress scenarios. Any such new or heightened requirements could result in increased regulatory, compliance or other costs or higher capital requirements. In connection with the transition to a low carbon economy, legislative or public policy changes and changes in consumer sentiment could negatively impact the businesses and financial condition of goodwillour clients, which may decrease revenues from those clients and amortizationincrease the credit risk associated with loans and other credit exposures to those clients. Our business, reputation and ability to attract and retain employees may also be harmed if our response to climate change is perceived to be ineffective or insufficient.
We may be adversely affected by the lack of soundness of other intangible assetsfinancial institutions. The recent failures of some depository institutions have raised concerns among depositors that their deposits may be at risk. While we believe the Bank is operated in a safe and sound manner, a market-wide loss of depositor confidence caused by the failures, or the perceived unsoundness, of other depository institutions could lead to deposit outflows at the Bank, potentially at levels that could materially and adversely affect our business, financial condition, results of operations and stock price. We assess our goodwill
Our ability to engage in routine funding transactions could be adversely affected by the actions and lack of soundness of other financial institutions. Financial services companies may be interrelated as a result of trading, clearing, counterparty, and other intangible assetsrelationships. We have exposure to different industries and long-lived assets for impairment annuallycounterparties, and through transactions with counterparties in the financial services industry, including broker-dealers, commercial banks, investment banks, and other financial intermediaries. As a result, defaults by, declines in the financial condition of, or even rumors or questions about, one or more frequently when requiredfinancial services companies, or the financial services industry in general, could lead to market-wide liquidity problems and losses or defaults by generally accepted accounting principles. We are required to record an impairment charge if circumstances indicate that the asset carrying values exceed their fair values. Our assessment of goodwill, other intangible assets, or long-lived assets could indicate that an impairment of the carrying value of such assets may have occurred that could result in a material, non-cash write-down of such assets, whichfinancial institutions. These losses could have a material and adverse effect on our results of operations and future earnings.

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Implementation of the various provisions of the Dodd-Frank Act-in particular provisions that are applicable to banks and bank holding companies with $10 billion or more in assets-may delay the receipt of regulatory approvals and increase our operating costs or otherwise have a material effect on our financial condition, results of operations and stock price. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) enacted in 2010 significantly changes the bank regulatory structure and affects the lending, deposit, investment, trading and operating activities of financial institutions and their holding companies. The Dodd-Frank Act requires various federal agencies to adopt a broad range of new implementing rules and regulations and to prepare numerous studies and reports for Congress. The federal agencies are given significant discretion in drafting the implementing rules and regulations, and the rule-making process is still underway.
Several requirements in the Dodd-Frank Act for new banking regulations are applicable to certain banks and bank holding companies with $10 billion or more in assets. As a result of the merger, we surpassed this threshold, and these provisions, subject to a phase in period, will significantly increase compliance and operating costs and otherwise may have a significant impact on our business, financial condition, results of operations and stock price. Such provisions include

Item 1B.UNRESOLVED STAFF COMMENTS
None.

Item 1C.CYBERSECURITY
General
As a financial institution, cybersecurity is a high priority for us as we receive and maintain the following:business and personal information of our customers on a daily basis. In addition, our business operations rely extensively on the continuous operation of our information and data processing systems and related back-up systems. Accordingly, we have developed and maintain a cybersecurity program that is focused on the goals of preparing for, preventing, detecting, mitigating, responding to and recovering from cyber threats and incidents, maintaining the privacy and protection of our customers’ data, and the continuity of our information and data processing systems.
Cybersecurity Risk Management
We believe that we have a robust cybersecurity program that is aligned to industry-standard cybersecurity frameworks. To identify and assess material risks from cybersecurity threats, our corporate risk management team considers cybersecurity threat risks alongside other company risks as part of our overall risk assessment and management process. To implement and maintain our cybersecurity program, we have a dedicated information security team that is managed by our Chief Information Security Officer. We believe our information security team is well positioned to identify risks from cybersecurity threats based on numerous job qualifications and on-going training.
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As a regulated financial institution, we have designed our cybersecurity program based on the requirements of the Gramm-Leach Bliley Act of 1999 (“GLBA”) and the Federal Financial Institutions Examination Council (“FFIEC”) Cybersecurity Assessment Tool. Our processes for identifying, assessing and managing material risks from cybersecurity threats includes reliance on the FFIEC Cybersecurity Assessment Tool as well as recurring audits and assessments of our cybersecurity program and controls.
In addition to the above, we periodically (and at least annually) conduct an overall inherent cybersecurity risk assessment based on threats, the likelihood of the threats, and the potential impact of these threats to the Company. We conduct this assessment by reviewing industry-recognized breach reports, identifying the top threats, calculating the likelihood and impact of these threats, and thereby determining our overall inherent risk. We then use the Cybersecurity Assessment Tool to establish a risk profile. Based on the risk profile, the FFIEC Cybersecurity Assessment Tool recommends a program maturity level, which we use to determine whether we have the requisite minimum security controls in place that are effective. This control evaluation then helps us to determine our cybersecurity residual risk and whether we need to implement any additional controls.
In addition to using FFIEC Cybersecurity Assessment Tool, we evaluate the robustness and effectiveness of our cybersecurity program both internally and externally with periodic internal risk assessments, and internal and third-party audits. We also use third party assessments to simulate threat actors to test and evaluate our cybersecurity controls and the effectiveness of our overall program. As part of our cybersecurity program, we have developed an incident response plan based on industry-standard cybersecurity frameworks, with procedures for responding to and remediating a cyber-incident, which also includes a process to activate our business continuity plan, if necessary. We also review and test our incident response plan through simulations and assessments.
Furthermore, we employ recurring security awareness training for employees and produce recurring security awareness material for our customers.
The Dodd-Frank Act createdsecure maintenance and transmission of confidential information, as well as execution of transactions over the Consumer Financial Protection Bureau (“CFPB”), which has broad powerssystems of our third-party service providers, is essential to supervise and enforce consumer protection laws. The CFPB has broad rule-making authority for a wide range of consumer protection laws that apply to all banks, including the authority to prohibit “unfair, deceptive or abusive” acts and practices. The CFPB has examination and enforcement authority over all banks with more than $10 billion in assets, and accordingly has assumed examination and enforcement authority over us post-merger.
The Dodd-Frank Act increased the authority of the FRB to examineprotect us and our non-bank subsidiariescustomers against fraud and gave the FRB the authority to establish rules regarding interchange fees charged for an electronic debit transaction by a payment card issuer that, together with its affiliates, has assets of $10 billion or more,security breaches and to enforce amaintain customer confidence. Information security and risk management are an integral part of our new statutory requirementproduct and service implementation and vendor relationship management to confirm that such fees be reasonablethey all meet the minimum standards and proportionalpolicies established and approved by our Board. We have developed processes to identify and oversee risks from cybersecurity threats associated with our third-party service providers, which includes the actual costinformation security team assisting with and assessing cybersecurity robustness during vendor selection and onboarding as well as risk-based monitoring of a transactionvendors on an ongoing basis.
In the ordinary course of our business, we have experienced and expect to the issuer (the “Durbin Amendment”). By regulation, the FRBcontinue to experience cyber-based attacks and other attempts to compromise our information systems, although none, to our knowledge, has limited the fees for such a transaction to the sum of 21 cents plus five basis points times the value of the transaction, plus up to one cent for fraud prevention costs. The effect of the Durbin Amendment has significantly lowered our interchange or “swipe” revenue, but such lower fees are not expected to havehad a material adverse effect on our business, financial condition or results of operations.
The Dodd-Frank Act established 1.35% With regards to risks from cybersecurity threats, including as the minimum Designated Reserve Ratio (“DRR”). The FDIC hasa result of previous cybersecurity incidents, we have conducted assessments and have determined that the DRR should be 2.0% and has adopted a plan under which it will meet the statutory minimum DRR of 1.35% by the statutory deadline of September 30, 2020. The Dodd-Frank Act requires the FDIC to offset the effectwe do not believe any of the identified risks have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations or financial condition. While we do not believe cybersecurity threats are reasonably likely to affect us, our business strategy, our results of operations or our financial conditions, like all financial institutions, we face a risks of such threats, the consequences of which could be material. See Item 1A “Risk Factors – We are subject to operational risks relating to our technology and information systems,” above. In addition, given the constant and evolving threat of cyber-based attacks, we incur significant costs in an effort to detect and prevent security breaches and incidents, and these costs may increase in the statutory minimum DRRfuture.
Cybersecurity Governance
Our Board oversees an enterprise-wide approach to 1.35% from the former statutory minimum of 1.15% on institutions with assets less than $10 billion. As a result of the merger, we are no longer entitled to benefit from the offset.
The Dodd-Frank Act requires a publicly traded bank holding company with $10 billion or more in assets to establish and maintain a risk committee responsible for enterprise-wide risk management, practices, compriseddesigned to support the achievement of an independent chairmanorganizational objectives in the areas of strategy, operations, reporting, and at least onecompliance without exposing the organization to undue risk. While our Board has the ultimate oversight responsibility for the risk management expert. The risk committee must approve and periodically reviewprocess, the risk-management policies of the bank holding company’s global operations and oversee the operations of its risk-management framework. The bank holding company’s risk-management framework must be commensurate with its structure, risk profile, complexity, activities and size. These requirements will first apply to us commencing on October 1, 2018, and we will need to build the necessary infrastructure to comply with these enhancedBoard Risk Committee also has responsibility for overseeing risk management, requirements well before the effective date.
A bank holding company with more than $10 billion in assets is required under the Dodd-Frank Act to conduct annual stress tests using various scenarios established by the FRB, including a baseline, adverse and severely adverse economic conditions (known as “Dodd-Frank Act Stress Tests” or “DFAST”). The stress tests are designed to determine whether our capital planning, assessmentoversight of our capital adequacy and risk management practices, adequately protect it and its affiliates in the event of an economic downturn. We must establish adequate internal controls, documentation, policies and procedures to ensure the annual stress test adequately meets these objectives. Our Board of Directors are required to review our policies and procedures at least annually. We are also required to report the results of its annual stress tests to the FRB, and to consider the results of the stress testsrisks from cybersecurity threats. Additionally, as part of its capital planningour cybersecurity governance, we annually purchase cybersecurity insurance customary for companies in our industry. While our Board and riskthe Board Risk Committee oversee our cybersecurity program, management practices. We will beis responsible for implementing the program.
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Our Chief Information Security Officer, who reports to our Chief Risk Officer, is responsible for managing our information security team, maintaining and continuing to develop and implement our cybersecurity program enterprise-wide and assessing and managing risks from cybersecurity threats, subject to oversight by and reporting to the DFAST regime commencing on January 1, 2018, but wellBoard Risk Committee, which in advanceturn reports directly to the Board. In addition to the Board Risk Committee, two of that date, weour management committees are also involved in overseeing risks from cybersecurity threats: our Enterprise Risk Management Committee and our Information Security Sub-Committee. These two management committees report to the Board Risk Committee, which in turn reports directly to the Board.
We have undertakenprocesses to inform the planningBoard Risk Committee and other actions that we deem reasonably necessarythe Board about risks from cybersecurity threats. Our management team reports its findings using the FFIEC Cybersecurity Assessment Tool and our information security team’s determination as to achieve timely compliance.whether our security controls, at a minimum, are in place and effective. The Chief Information Security Officer and the information security team regularly report to the Board Risk Committee and the Board regarding cybersecurity and related threats and trends, changes, control effectiveness and residual risk, the areas where our cybersecurity program may be improved and improvements made to address and remediate issues.
It is difficult to predict the overall compliance cost of these provisions, which became effective (with phase-in periods) when the merger was consummated. Compliance with these provisions will require additional staffing, engagement of external consultants and other operating costs that could have a material adverse effect on our future financial condition, results of operations and stock price.


Item 2.PROPERTIES
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Item 1B.
UNRESOLVED STAFF COMMENTS
None.
Item 2.PROPERTIES
Our principal executive offices are located at 3200 Wilshire Blvd., Suite 1400, Los Angeles, California 90010. As of December 31, 2017,2023, we operated full-service branches at 5647 leased and seven owned facilities, and we operated loan production offices at eight9 leased facilities. Expiration dates of our leases range from 20182024 to 2030.2032. We believe our present facilities are suitable and adequate for our current operating needs.

Item 3.LEGAL PROCEEDINGS
Item 3.LEGAL PROCEEDINGS
In the normal course of business, we are involved in various legal claims. We have reviewed all legal claims against us with counsel and have taken into consideration the views of such counsel as to the potential outcome of the claims. Accrued lossLoss contingencies for all legal claims totaled approximately $414$535 thousand at December 31, 2017.2023. It is reasonably possible we may incur losses in addition to the amounts we have accrued. However, at this time, we are unable to estimate the range of additional losses that are reasonably possible because of a number of factors, including the fact that certain of these litigation matters are still in their early stages and involve claims for which, at this point, we believe have little to no merit. Management has considered these and other possible loss contingencies and does not expect the amounts to be material to any of the consolidated financial statements.

Item 4.MINE SAFETY DISCLOSURES
Item 4.MINE SAFETY DISCLOSURES
Not applicable.Applicable.



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Part II

Item 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Item 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the NASDAQ Global Select Market under the symbol “HOPE.”
The following table sets forth the quarterly range of high and low closing prices and quarterly dividenddividends paid on our common stock for the past two fiscal years:
For the Three Months Ended
March 31, 2022June 30, 2022September 30, 2022December 31, 2022March 31, 2023June 30, 2023September 30, 2023December 31, 2023
Dividends Paid$0.14 $0.14 $0.14 $0.14 $0.14 $0.14 $0.14 $0.14 
 Closing Sale Price 
Dividends
Paid
Quarters ended:High Low 
December 31, 2017$19.22

$17.03

$0.13
September 30, 2017$19.17

$15.21

$0.13
June 30, 2017$19.63

$17.41

$0.12
March 31, 2017$22.69

$18.57

$0.12
December 31, 2016$22.41
 $15.45
 $0.12
September 30, 2016$17.45
 $14.41
 $0.11
June 30, 2016$16.36
 $14.09
 $0.11
March 31, 2016$16.80
 $13.79
 $0.11

The Board expects to continue to pay quarterly cash dividends, however, no assurance can be given as to whether future dividends will be paid as cash dividend payments are dependent on the Company’s future earnings, capital requirements, and financial condition.
The closing price for our common stock on the NASDAQ Global Select Market on February 21, 201820, 2024 was $18.74$11.20 per share. As of February 21, 2018,20, 2024, there were 1,1881,112 stockholders of record of our common stock.
Our ability to pay dividends is subject to restrictions set forth in the Delaware General Corporation Law. The Delaware General Corporation Law provides that a Delaware corporation may pay dividends either (i) outUnregistered Sales of the corporation’s surplus (as defined by Delaware law), or (ii) if there isEquity Securities
There were no surplus, outsales of the corporation’s net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. In addition, the payment of dividends by us is subject to review and possible limitationany equity securities by the FRBCompany during the period covered this Annual Report on Form 10-K that were not registered under the Securities Act.
Issuer Purchases of Equity Securities
In January 2022, the Board approved a share repurchase program that authorized the Company to repurchase up to $50.0 million of its authority as regulator of bank holding companies, including any limitations whichcommon stock. The stock repurchase authorization does not have an expiration date and may be imposed as a condition in connection withmodified, amended, suspended, or discontinued at the Company’s discretion at any regulatory approvals we may apply for. In general, the FRB discourages the payment of dividends on common stock in amounts exceeding a holding company’s net income available to common stockholders for the four quarters preceding a dividend payment. If we defer interest on the subordinated debentures issued in connection with our trust preferred securities, Hope Bancorp would also be prohibited from paying any dividends on common stock or preferred stock until Hope Bancorp is current on its interest payments.
Our ability to pay cash dividends in the future will depend in large part on the ability of the Bank to pay dividends on its capital stock to us.time without notice. The ability of the Bank to declare a cash dividend to us is subject to compliance with its minimum capital requirements and, additional limitations under California law and regulations.
The applicable statutory and regulatory limitations on the declaration and payment of dividends are further described in “Item 1. Business – Supervision and Regulation – Dividends.”
WeCompany did not repurchase any shares as part of our shares of common stockthis program during the yearthree months ended December 31, 2017. We currently do not have a common stock2023.
The following table summarizes share repurchase program in place.activities during the three months ended December 31, 2023:

PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced ProgramApproximate Dollar Value of Shares that May Yet Be Purchased Under the Program
(Dollars in thousands)
October 1, 2023 to October 31, 2023— $— — $35,333 
November 1, 2023 to November 30, 2023— — — 35,333 
December 1, 2023 to December 31, 2023— — — 35,333 
Total— $— — 


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Stock Performance Graph
The following graph compares the yearly percentage change in the cumulative total shareholder return (stock price appreciation plus reinvested dividends) on our common stock with (i) the cumulative total return of the NASDAQ Composite Index, and (ii) the cumulative total return of the S&P Small Cap 600 Index, (iii) a published index comprised of banks and thrifts selected by SNL Financial LLC, and (iv) the cumulative total return of the S&P 500KBW Regional Banking Index.
The graph assumes an initial investment of $100 and reinvestment of dividends. Points on the graph represent the performance as of the last business day of each of the years indicated. The graph is not indicative of future price performance.
The following graph does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any filing by Hope Bancorp under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we may specifically incorporate this graph by reference.
COMPARATIVE CUMULATIVE TOTAL RETURN
AMONG HOPE BANCORP, NASDAQ MARKET INDEX, S&P SMALL CAP 600 INDEX,
SNL BANK & THRIFT INDEX AND, S&P 500 INDEX

3407
ASSUMES $100 INVESTED ON DECEMBER 31, 20122018
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 20172023
 Period Ending
Stock/Index12/31/201812/31/201912/31/202012/31/202112/31/202212/31/2023
Hope Bancorp, Inc.$100.00$130.29$101.59$142.72$129.07$128.94
NASDAQ Composite Index$100.00$136.69$198.10$242.03$163.28$236.17
KBW Regional Banking Index$100.00$123.81$113.03$154.45$143.75$143.17

Item 6.[RESERVED]
27

 Period Ending
Stock/Index12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017
Hope Bancorp, Inc.$100.00 $146.02 $129.62 $159.60 $208.86 $178.79
NASDAQ Composite$100.00 $140.12 $160.78 $171.97 $187.22 $242.71
S&P 600 Index$100.00 $141.31 $149.45 $146.50 $185.40 $209.94
SNL Bank and Thrift$100.00 $136.92 $152.85 $155.94 $196.86 $231.49
S&P 500 Index$100.00 $132.39 $150.51 $152.59 $170.84 $208.14

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Item 6.SELECTED FINANCIAL DATA
The following table presents selected financial and other data for each of the years in the five-year period ended December 31, 2017. The information below should be read in conjunction with, the more detailed information included elsewhere herein, including our Audited Consolidated Financial Statements and Notes thereto.
 As of or For The Year Ended December 31,
 2017 2016 2015 2014 2013
 (Dollars in thousands, except share and per share data)
Income Statement Data:         
Interest income$572,104
 $421,934
 $313,660
 $302,657
 $283,073
Interest expense90,724
 58,579
 40,618
 36,060
 30,018
Net interest income481,380
 363,355
 273,042
 266,597
 253,055
Provision for loan losses17,360
 9,000
 8,000
 12,638
 20,000
Net interest income after provision for loan losses464,020
 354,355
 265,042
 253,959
 233,055
Noninterest income66,415
 51,819
 43,691
 44,187
 42,719
Noninterest expense266,601
 214,975
 153,384
 151,624
 141,620
Income before income tax provision263,834
 191,199
 155,349
 146,522
 134,154
Income tax provision124,389
 77,452
 63,091
 57,907
 52,399
Net income$139,445
 $113,747
 $92,258
 $88,615
 $81,755
          
Per Common Share Data:  
      
Earnings - basic$1.03
 $1.10
 $1.16
 $1.11
 $1.03
Earnings - diluted$1.03
 $1.10
 $1.16
 $1.11
 $1.03
Book value (period end)$14.23
 $13.72
 $11.79
 $11.10
 $10.18
Cash dividends declared per common share$0.50
 $0.45
 $0.42
 $0.35
 $0.25
Number of common shares outstanding (period end)135,511,891
 135,240,079
 79,566,356
 79,503,552
 79,441,525
Balance Sheet Data—At Period End:         
Assets$14,206,717
 $13,441,422
 $7,912,648
 $7,140,330
 $6,475,199
Securities available for sale$1,720,257
 $1,556,740
 $1,010,556
 $792,523
 $701,751
Loans receivable, net of unearned loan fees and discounts (excludes loans held for sale)$11,102,575
 $10,543,332
 $6,248,341
 $5,565,192
 $5,074,175
Deposits$10,846,609
 $10,642,035
 $6,340,976
 $5,693,452
 $5,148,057
FHLB advances and federal funds purchased$1,227,593
 $754,290
 $530,591
 $480,975
 $421,352
Subordinated debentures$100,853
 $99,808
 $42,327
 $42,158
 $57,410
Stockholders’ equity$1,928,255
 $1,855,473
 $938,095
 $882,773
 $809,374
          
Average Balance Sheet Data:  
      
Assets$13,648,963
 $10,342,063
 $7,389,530
 $6,830,244
 $6,042,674
Securities available for sale$1,679,468
 $1,276,068
 $871,010
 $713,775
 $699,812
Gross loans, including loans held for sale$10,642,349
 $8,121,897
 $5,846,658
 $5,355,243
 $4,692,089
Deposits$10,751,886
 $8,232,984
 $5,879,704
 $5,439,920
 $4,739,261
Stockholders’ equity$1,907,746
 $1,342,954
 $912,609
 $848,443
 $788,570
          
          
          
          
          
          
          
          
          
          
          

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Item 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 As of or For The Year Ended December 31,
 2017 2016 2015 2014 2013
 (Dollars in thousands)
Selected Performance Ratios:         
Return on average assets(1)
1.02% 1.10% 1.25% 1.30% 1.35%
Return on average stockholders’ equity(2)
7.31% 8.47% 10.11% 10.44% 10.37%
Average stockholders’ equity to average assets13.98% 12.99% 12.35% 12.42% 13.05%
Dividend payout ratio
(dividends per share/earnings per share)
48.54% 40.86% 36.21% 31.53% 24.27%
Net interest spread(3)
3.46% 3.49% 3.62% 3.88% 4.23%
Net interest margin(4)
3.80% 3.75% 3.88% 4.13% 4.46%
Yield on interest earning assets(5)
4.51% 4.36% 4.46% 4.68% 4.99%
Cost of interest bearing liabilities(6)
1.05% 0.87% 0.84% 0.80% 0.76%
Efficiency ratio(7)
48.67% 51.78% 48.43% 48.79% 47.88%
Regulatory Capital Ratios:         
Hope Bancorp:         
Common Equity Tier 112.30% 12.10% 12.08 % 12.96% 12.65%
Tier 1 Leverage11.54% 11.49% 11.53 % 11.62% 11.97%
Tier 1 risk-based13.11% 12.92% 12.67 % 13.64% 13.66%
Total risk-based13.82% 13.64% 13.80 % 14.80% 14.90%
Bank of Hope:         
Common Equity Tier 112.95% 12.75% 12.56 % 13.44% 13.46%
Tier 1 Leverage11.40% 11.33% 11.43 % 11.45% 11.79%
Tier I risk-based12.95% 12.75% 12.56 % 13.44% 13.46%
Total risk-based13.66% 13.46% 13.69 % 14.61% 14.70%
          
Asset Quality Data:         
Nonaccrual loans$46,775
 $40,074
 $40,801
 $46,353
 $39,154
Loans 90 days or more past due and still accruing (8)
407
 305
 375
 361
 5
Restructured loans (accruing)67,250
 48,874
 47,984
 57,128
 33,903
Total nonperforming loans114,432
 89,253
 89,160
 103,842
 73,062
Other real estate owned10,787
 21,990
 21,035
 21,938
 24,288
Total nonperforming assets$125,219
 $111,243
 $110,195
 $125,780
 $97,350
          
Asset Quality Ratios:         
Nonaccrual loans to loans receivable0.42% 0.38% 0.65 % 0.83% 0.77%
Nonperforming loans to loans receivable1.03% 0.85% 1.43 % 1.87% 1.44%
Nonperforming assets to total assets0.88% 0.83% 1.39 % 1.76% 1.50%
Nonperforming assets to loans receivable and
  other real estate owned
1.13% 1.05% 1.76 % 2.25% 1.91%
Allowance for loan losses to loans receivable0.76% 0.75% 1.22 % 1.22% 1.33%
Allowance for loan losses to nonaccrual loans180.74% 197.99% 187.27 % 146.18% 171.94%
Allowance for loan losses to nonperforming loans73.88% 88.90% 85.70 % 65.25% 92.14%
Allowance for loan losses to nonperforming assets67.51% 71.32% 69.34 % 53.87% 69.15%
Net charge-offs (recoveries) to average loans receivable0.11% 0.07% (0.01)% 0.23% 0.42%
(1)Net income divided by average assets.
(2)Net income divided by average stockholders’ equity.
(3)Difference between the average yield earned on interest earning assets and the average rate paid on interest bearing liabilities.
(4)Net interest income expressed as a percentage of average interest earning assets.
(5)Interest income divided by average interest earning assets.
(6)Interest expense divided by average interest bearing liabilities.
(7)Noninterest expense divided by the sum of net interest income plus noninterest income.
(8)Excludes acquired credit impaired loans totaling $18.1 million, $19.6 million, $12.2 million, $30.4 million, and $43.8 million as of December 31, 2017, 2016, 2015, 2014, and 2013, respectively.

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Item 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read theThe following discussion and analysis of our financial condition and results of operations should be read together with our Consolidated Financial Statements and accompanying notes presented elsewhere in this Report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under Item 1A “Risk Factors” and elsewhere in this Report. Please see the “Forward Looking Information” immediately preceding Part I of this Report.
Overview
We offer a full range of commercial and retail banking loan and deposit products through Bank of Hope. We have 63 banking offices in California, New York/New Jersey, Illinois, Washington, Texas, Virginia, Alabama, and Georgia. We have eight loan production offices located in Atlanta, Dallas, Denver, Portland, Seattle, Fremont, Newport Beach, and Laguna Niguel. We offer our banking services through our network of banking offices and loan production offices to our customers who typically are small to medium-sized businesses in our market areas. We accept deposits and originate a variety of loans including commercial business loans, commercial real estate loans, trade finance loans, SBA loans, and consumer loans.
Our results are affected by economic conditions in our markets and to a lesser degree in South Korea. A decline in economic and business conditions in our market areas or in South Korea may have a material adverse impact on the quality of our loan portfolio or the demand for our products and services, which in turn may have a material adverse effect on our financial condition and results of operations.
Our principal business involves earning interest on loans and investment securities that are funded primarily by customer deposits, wholesale deposits, and other borrowings. Our operating income and net income are derived primarily from the difference between interest income received from interest earning assets and interest expense paid on interest bearing liabilities and, to a lesser extent, from fees received in connection with servicing loan and deposit accounts and income from the sale of SBA loans. Our major expenses are the interest we pay on deposits and borrowings, provisions for loancredit losses and general operating expenses, which primarily consist of salaries and employee benefits, occupancy costs, and other operating expenses. Interest rates are highly sensitive to many factors that are beyond our control, such as changes in the national economy and in the related monetary policies of the FRB, inflation, unemployment, consumer spending and political changes and events. We cannot predict the impact that these factors and future changes in domestic and foreign economic and political conditions might have on our performance.
MergersOur results are affected by economic conditions in our markets and Acquisitionsto a lesser degree in South Korea. A decline in economic and business conditions in our market areas or in South Korea may have a material adverse impact on the quality of our loan portfolio or the demand for our products and services, which in turn may have a material adverse effect on our financial condition and results of operations.
On January 23, 2017, we announced the signing of a definitive agreement
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Selected Financial Data
The following table presents selected financial and plan of merger (the “U & I Merger Agreement”) with U & I Financial Corporation (“U & I”) pursuant to which U & I would have merged with and into Hope Bancorp with Hope Bancorp as the surviving corporation. As partother data for each of the merger, UniBank, a wholly-owned subsidiary of U & I, would have merged with and intoyears in the Bank. Subsequently on September 15, 2017, we announced the termination of the proposed merger with U & I as regulatory approval had not been obtained.five-year period ended December 31, 2023. The Mutual Termination Agreement provides, among other things, that each party will bear its own costs and expensesinformation below should be read in connectionconjunction with, the terminated transaction, without penalties or termination fees. In connection withmore detailed information included elsewhere herein, including our Audited Consolidated Financial Statements and Notes thereto.
As of or For The Year Ended December 31,
 20232022202120202019
 (Dollars in thousands, except share and per share data)
Income Statement Data:
Interest income$1,048,878 $716,115 $566,532 $598,878 $684,786 
Interest expense523,017 137,694 53,762 131,380 218,191 
Net interest income525,861 578,421 512,770 467,498 466,595 
Provision (credit) for credit losses29,100 9,600 (12,200)95,000 7,300 
Net interest income after provision (credit) for credit losses496,761 568,821 524,970 372,498 459,295 
Noninterest income45,577 51,397 43,594 53,432 49,683 
Noninterest expense364,451 324,170 293,292 283,639 282,628 
Income before income tax provision177,887 296,048 275,272 142,291 226,350 
Income tax provision44,214 77,771 70,700 30,776 55,310 
Net income$133,673 $218,277 $204,572 $111,515 $171,040 
Per Common Share Data:
Earnings - basic$1.11 $1.82 $1.67 $0.90 $1.35 
Earnings - diluted$1.11 $1.81 $1.66 $0.90 $1.35 
Cash dividends declared$0.56 $0.56 $0.56 $0.56 $0.56 
Book value (period end)$17.66 $16.90 $17.44 $16.66 $16.19 
Number of common shares outstanding (period end)120,126,786 119,495,209 120,006,452 123,264,864 125,756,543 
Balance Sheet Data—At Period End:
Assets$19,131,522 $19,164,491 $17,889,061 $17,106,664 $15,667,440 
Interest earning cash and deposits at other banks1,756,154 293,002 44,947 94,014 415,437 
Investment securities AFS and HTM2,408,971 2,243,195 2,666,275 2,285,611 1,715,987 
Loans receivable, net of unearned loan fees and discounts (excludes loans held for sale)13,853,619 15,403,540 13,952,743 13,563,213 12,276,007 
Deposits14,753,753 15,738,801 15,040,450 14,333,912 12,527,364 
FHLB and FRB borrowings1,795,726 865,000 300,000 250,000 625,000 
Convertible notes, net444 217,148 216,209 204,565 199,458 
Subordinated debentures107,825 106,565 105,354 104,178 103,035 
Stockholders’ equity2,121,243 2,019,328 2,092,983 2,053,745 2,036,011 
Average Balance Sheet Data:
Assets$19,806,163 $18,231,609 $17,467,665 $16,515,102 $15,214,412 
Interest earning cash and deposits at other banks1,685,462 116,689 774,756 921,163 390,755 
Investment securities AFS and HTM2,262,840 2,415,621 2,392,589 1,899,948 1,796,412 
Loans receivable and loans held for sale14,732,166 14,634,627 13,343,431 12,698,523 11,998,675 
Deposits15,630,018 15,172,272 14,727,807 13,560,629 12,066,844 
FHLB and FRB borrowings1,618,292 528,342 208,721 435,836 688,652 
Stockholders’ equity2,061,665 2,034,027 2,071,453 2,032,570 1,981,811 
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 As of or For The Year Ended December 31,
20232022202120202019
 (Dollars in thousands)
Selected Performance Ratios:
Return on average assets(1)
0.67 %1.20 %1.17 %0.68 %1.12 %
Return on average stockholders’ equity(2)
6.48 %10.73 %9.88 %5.49 %8.63 %
Dividend payout ratio50.44 %30.91 %33.71 %62.22 %41.54 %
Net interest margin(3)
2.81 %3.36 %3.09 %3.00 %3.27 %
Yield on interest earning assets(4)
5.60 %4.16 %3.42 %3.84 %4.81 %
Cost of interest bearing liabilities(5)
4.00 %1.32 %0.56 %1.26 %2.16 %
Efficiency ratio(6)
63.78 %51.47 %52.72 %54.45 %54.74 %
Regulatory Capital Ratios:
Tangible common equity (“TCE”) ratio8.86 %8.29 %9.31 %9.50 %10.27 %
Hope Bancorp:
Common equity tier 112.28 %10.55 %11.03 %10.94 %11.76 %
Tier 1 capital12.96 %11.15 %11.70 %11.64 %12.51 %
Total capital13.92 %11.97 %12.42 %12.87 %13.23 %
Tier 1 leverage10.11 %10.15 %10.11 %10.22 %11.22 %
Bank of Hope:
Common equity tier 112.75 %12.03 %12.96 %12.90 %13.72 %
Tier 1 capital12.75 %12.03 %12.96 %12.90 %13.72 %
Total capital13.71 %12.85 %13.68 %14.14 %14.44 %
Tier 1 leverage9.94 %10.94 %11.20 %11.33 %12.29 %
Asset Quality Data:
Nonaccrual loans(7)
$45,204 $49,687 $54,616 $85,238 $54,785 
Accruing delinquent loans past due 90 days or more (8)
261 401 2,131 614 7,547 
Accruing troubled debt restructured loans— 16,931 52,418 37,354 35,709 
Total nonperforming loans45,465 67,019 109,165 123,206 98,041 
Other real estate owned63 2,418 2,597 20,121 24,091 
Total nonperforming assets (9)
$45,528 $69,437 $111,762 $143,327 $122,132 
Asset Quality Ratios:
Nonaccrual loans to loans receivable0.33 %0.32 %0.39 %0.63 %0.45 %
Nonperforming assets to total assets (9)
0.24 %0.36 %0.62 %0.84 %0.78 %
Allowance for credit losses to loans receivable1.15 %1.05 %1.01 %1.52 %0.77 %
Allowance for credit losses to nonaccrual loans351.06 %326.76 %257.34 %242.55 %171.84 %
Net charge-offs (recoveries) to average loans receivable0.22 %(0.08)%0.40 %0.07 %0.04 %

(1)Net income divided by average assets.
(2)Net income divided by average stockholders’ equity.
(3)Net interest income expressed as a percentage of average interest earning assets.
(4)Interest income divided by average interest earning assets.
(5)Interest expense divided by average interest bearing liabilities.
(6)Noninterest expense divided by the termination, the parties have provided mutual releases to one another relating to the merger transaction.sum of net interest income plus noninterest income.
On July 29, 2016, we completed the merger with Wilshire Bancorp, Inc (“Wilshire”). Through the merger, we(7)Excludes delinquent SBA loans that are guaranteed and currently in liquidation.
(8)Excludes acquired Wilshire’s thirty-five full-service branch offices, twenty-two of which were located in California, eight in New York and New Jersey, three in Texas, and one of each in Georgia and Alabama. Under the terms of the Merger Agreement, Wilshire shareholders had the right to receive 0.7034 of a share of our common stock in exchange for each share of Wilshire common stock they own in a 100% stock-for-stock transaction.
On August 13, 2013, we completed the acquisition of Foster Bankshares, Inc. (“Foster”), the holding company of Foster Bank. Through the acquisition, we acquired Foster’s nine full-service branch offices, eight of which were located in Illinois and one in Virginia. Under the terms of the acquisition agreement, we issued an aggregate of 189,838 shares of our common stock and paid $2.0credit impaired loans totaling $13.2 million in cash to Foster shareholders.
On February 15, 2013, we completed the acquisition of Pacific International Bancorp, Inc. (“PIB”), the holding company of Pacific International Bank, a Washington state-chartered bank. Through the acquisition, we acquired PIB’s four full-service branch offices in the Seattle metropolitan area. Under the terms of the acquisition agreement, we issued an aggregate of 632,050 shares of BBCN common stock for each share of PIB common stock owned as of the closeDecember 31, 2019.
(9)Nonperforming assets consist of business February 15, 2013.

nonperforming loans and OREO. Prior to January 1, 2023, nonperforming loans included accruing TDR loans.
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Each acquisition was accounted for as an acquisition in accordance with the acquisition method of accounting as detailed in Accounting Standards Codification (“ASC”) 805, Business Combinations. The acquisition method of accounting requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree based on their fair values as of the date of acquisition. This process is heavily reliant on measuring and estimating the fair values of all the assets and liabilities of the acquired entities. To the extent we did not have the requisite expertise to determine the fair values of the assets acquired and liabilities assumed, we engaged third party valuation specialists to assist us in determining such values.
Critical Accounting Policies
Our financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and generally accepted practices within the banking industry. The financial information contained within these statements is, to a significant extent, financial information that is based on approximate measures of the financial effects of transactions and events that have already occurred. All of our significant accounting policies are described in Note 1 of our Notes to Consolidated Financial Statements presented elsewhere in this Report and are essential to understanding Management’s Discussion and Analysis of Financial Condition and Results of Operations. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may materially and adversely differ from these estimates under different assumptions or conditions.
The following is a summary of the more subjective and complex accounting estimates and principlesjudgments affecting the financial condition and results reported in our financial statements. In each area, we have identified the variables we believe to be the most important in the estimation process. We use the best information available to us to make the estimations necessary to value the related assets and liabilities in each of these areas.
Business Combinations
Mergers and acquisitions are accounted for in accordance with ASC 805 “Business Combinations” using the acquisition method of accounting. Assets and liabilities acquired and assumed are generally recorded at their fair values as of the date of the transaction. The excess of purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Significant Management has reviewed these critical accounting estimates and judgments are involved in the fair valuation and purchase price allocation process. Critical accounting policies related to acquired loans is discussed in more detail below under “Acquired Loans and Purchase Credit Impaired Loans”.disclosures with our Audit Committee.
Investment Securities
The fair values ofDescription - We evaluate investment securities are generally determined by quoted market prices obtained from independent external broker or external pricing services providers who have experience in valuing these securities. We perform a monthly analysis on the broker quotes received from third partiesAFS and HTM for impairment related to assess whether the prices represent a reasonable estimate of the fair value. The procedures include, but are not limited to, initial and on-going review of third party pricing methodologies as well as independent auditors’ reports from the third party regarding its controls over valuation of financial instruments, review of pricing trends and monitoring of trading volumes. We also compare the market prices obtained from one source to another reputable independent external broker or independent external pricing service provider for the reasonableness of the initial market prices obtained on a quarterly basis. We did not adjust any of the prices provided to us by the independent pricing services at December 31, 2017 or 2016.
We evaluate securities for other-than-temporary impairmentcredit losses on at least a quarterly basis,basis. Based on our evaluation, we do not believe that we had any investment securities AFS or HTM with a credit loss impairment as of December 31, 2023. Investment securities are discussed in more detail under “Financial Condition - Investment Securities Portfolio.”
Subjective Estimates and more frequentlyJudgments- Significant judgment is involved in determining when economic or market concerns warrant such evaluation. Consideration is given to the financial condition and near-term prospects of the issuer; the length of time and the extent to which thean investment securities AFS decline in fair value has been less than cost, and our intentionis credit impaired. Investment securities AFS in unrealized loss positions are first assessed as to whether we intend to sell, or whetherif it is more likely than not that we will be required to sell athe security in an unrealized loss position before recovery of its amortized cost basis. If one of the criteria is met, the security’s amortized cost basis is written down to fair value through current earnings. We then apply a zero credit loss assumption to investment securities issued by the U.S. government or government-sponsored enterprises. For other securities that do not meet these criteria, we evaluate whether the decline in fair value resulted from credit losses or other factors. In analyzingevaluating whether a credit loss exists, we set up an issuer’s financial condition, we consider whetherinitial filter for impairment triggers. Once the quantitative filters have been triggered, the securities are placed on a watch list and an additional assessment is performed to identify whether a credit impairment exists. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security and the issuer, among other factors.
The investment securities HTM as of December 31, 2023, were all issued by the federalU.S. government or its agencies, whether downgrades by bond rating agencies have occurred,government-sponsored enterprises and therefore the results of reviewsCompany applied a zero credit loss assumption.
Impact if Actual Results Differ From Estimates and Judgments - Changes in management’s assessment of the issuer’s financial condition. We do not believefactors used to determine if an investment security is credit impaired could lead to additional impairment charges. Additionally, a security that we had any investment securities availableno apparent risk could be affected by a sudden or acute market condition and necessitate an impairment charge.
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Allowance for sale with unrealizedCredit Losses
Description - The allowance for credit losses that would be deemedis maintained at a level believed to be other-than-temporarily impairedadequate by management to absorb expected lifetime credit losses in the loan portfolio as of December 31, 2017. Investment securities arethe date of the consolidated financial statements. The adequacy of the allowance for credit losses is determined by management based upon an evaluation and review of the credit quality of the loan portfolio, consideration of current and projected economic conditions and variables, historical loss experience, relevant internal and external factors that affect the collection of a loan, and other pertinent factors.
The allowance for credit losses is discussed in more detail under “Financial Condition—Investment Securities Portfolios” below.
Condition - Allowance for Loan LossesCredit Losses.”
Accounting forSubjective Estimates and Judgments- We determine the adequacy of the allowance for credit losses by analyzing and estimating lifetime expected credit losses in the loan portfolio. The allowance for credit losses involves significant judgmentsis determined utilizing quantitative and qualitative loss factors.
Included in the quantitative portion of our analysis of the allowance for credit losses are key inputs including borrowers’ net operating income, debt coverage ratios, and real estate collateral values, as well as key inputs that are more subjective or require management’s judgment including key macroeconomic variables from Moody’s forecast scenarios including GDP, unemployment rates, interest rates, and commercial real estate prices. These key inputs are utilized in our models to develop probability of default (“PD”) and loss given default (“LGD”) assumptions used in the calculation of estimated quantitative losses. The key macroeconomic variables were derived from Moody’s consensus scenario as of December 31, 2023 and 2022.
Certain key macroeconomic variable inputs used in the calculation of our allowance for credit losses experienced a weakening between projections as of December 31, 2022 versus projections as of December 31, 2023, particularly projected GDP growth and CRE Price Index growth rates. This contributed to an increase in our allowance for credit losses estimated loss rates at December 31, 2023, compared with at December 31, 2022. Changes in the key macroeconomic variables are presented in the tables below.
Moody's consensus projected key macroeconomic variable inputs as of December 31, 2023:
Year Ending December 31,
202420252026
GDP Growth*0.7%2.2%1.9%
Unemployment Rate4.4%4.1%4.0%
CRE Price Index Growth*(6.4)%6.9%8.5%
10 Year Treasury Rate4.2%4.0%4.0%

* Represents year over year growth rates.
Moody's consensus projected key macroeconomic variable inputs as of December 31, 2022:
Year Ending December 31,
202320242025
GDP Growth*0.3%1.6%2.6%
Unemployment Rate4.6%4.7%4.2%
CRE Price Index Growth*(2.6)%1.7%6.4%
10 Year Treasury Rate4.5%3.7%3.3%

* Represents year over year growth rates.
In addition to an estimate of quantitatively derived losses, our allowance for credit losses also includes an estimate of qualitatively derived losses to account for risks not fully captured by the quantitative calculation of estimated credit losses. At December 31, 2023, the qualitative portion of our allowance for credit losses totaled $35.7 million compared with $45.1 million at December 31, 2022. The qualitative portion of our allowance for credit losses is determined by management and takes into consideration factors related to changes to lending policies, changes in the nature and volume of loans, risks related to lending management, changes to the volume and severity of past due and nonaccrual loans, changes in the quality of loan review, concentrations of credit, and other external factors. Some of these factors are more subjective than others and require significant judgment from management to determine estimated losses.
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Impact if Actual Results Differ From Estimates and Judgments - Adverse changes in management’s assessment of the assumptions and key inputs used to determine the allowance for credit losses could lead to increases in the allowance for credit losses through additional provisions for credit losses. If actual losses and conditions differ materially from the assumptions used to determine the allowance for credit losses, our actual credit losses could differ materially from management’s estimates.
Moody’s consensus forecast assumes that the probability that the economy will perform better than the consensus estimates is equal to the probability that it will perform worse. A sensitivity analysis of our allowance for credit losses was performed by estimating credit losses using the Moody’s S2 scenario as of December 31, 2023, which has a material impactmore negative outlook on the carrying value of net loans.economy compared with the Moody’s consensus scenario. The judgments andS2 scenario includes assumptions used by management are based on historical data and management’s analysis of other qualitative factors, including the current economic environment as described under “Financial Condition—Allowance for Loan Losses” below.

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Purchased Credit Impaired (“PCI”) Loans
In accordance with ASC 310-30, PCI loans were aggregated into pools based on individually evaluated common risk characteristics and expected cash flows were estimated onelevated market interest rates despite a pool basis. Each pool is accounted for as a single asset with a single interest rate, cumulative loss rate and cash flow expectation. A loan will be removed from a pool of loans at its carrying value only if the loan is sold or foreclosed, assets are received in satisfactionweakening of the loan oreconomy due to inflationary concerns, elevated risk associated with the loan is written off.
The cash flows expectedRussian invasion of Ukraine and the Hamas/Israel conflict, rising tensions with China regarding Taiwan that could limit the global chip supply, a decline in consumer confidence due to be received overconcerns of additional bank failures, increased risk of a federal government shutdown, and a decline in the lifestock market in 2024. Incorporating key macroeconomic inputs from Moody’s S2 projected scenario in our calculation of the pools were estimated by managementallowance for credit losses resulted in additional allowance for credit losses of approximately $21.6 million compared with the assistance of a third party valuation specialist. These cash flows were utilized in calculating the carrying values of the pools and underlying loans, book yields, effective interest income and impairment, if any, based on actual and projected events. Default rates, loss severity and prepayment speeds assumptions are periodically reassessed and updated within the accounting model to update the expectation of future cash flows. The excess of the cash expected to be collected over the pool’s carrying value is considered to be the accretable yield and is recognized as interest income over the estimated life of the loan poolresults using the effective interest yield method. The accretable yield will change due to changes inMoody’s consensus forecast as of December 31, 2023. Management reviews the timingresults using the comparison scenario for sensitivity analysis and amounts of expected cash flows. Changes inconsidered the accretable yield are disclosed quarterly.results when evaluating the qualitative factor adjustments.
The excess of the contractual balances due over the cash flows expected to be collected is considered to be nonaccretable difference. The nonaccretable difference represents our estimate of theWhile management believes that it has established adequate allowances for lifetime credit losses expected to occuron loans, actual results may prove different, and was considered in determiningthe differences could be material.
Goodwill
Description - Goodwill is generally determined as the excess of the fair value of the loans as of their acquisition date. Subsequent to their acquisition date, any increases in expected cash flowsconsideration paid over those expected at the acquisition date in excess of fair value are adjusted through the accretable difference on a prospective basis. Any subsequent decreases in expected cash flows over those expected at their acquisition date are recognized by recording a provision for loan losses.
PCI loans that met the criteria for nonaccrual of interest prior to the acquisition are considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if we can reasonably estimate the timing and amount of the expected cash flows on such loans and if we expect to collect the new carrying value of the loansnet assets acquired and liabilities assumed as of the acquisition date. Goodwill recorded in full. As such, we no longer considera purchase business combination is determined to have an indefinite useful life and is not amortized but tested for impairment at least annually. Goodwill may also be tested for impairment on an interim basis if circumstances change or an event occurs between annual tests that would more likely than not reduce the loan to be nonaccrual or nonperforming and accrue interest on these loans, including the impact of any accretable discount. We have determined that we can reasonably estimate future cash flows on any such acquired loans that are past due 90 days or more and on which we are accruing interest and we expect to fully collect the carryingfair value of the loans.reporting unit below its carrying amount. The Company is managed as a single combined operating segment. An impairment loss must be recognized for any excess of carrying value over fair value of the goodwill.
Goodwill
We assess goodwill for impairment annually.Subjective Estimates and Judgments- Before applying the two-step goodwill impairment test, in accordance with ASC 350 “Intangibles“Intangibles - Goodwill and Other”, we makeperform a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. If we conclude that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, we do not perform Step 1 of the two-step impairment test.analysis. We assessedassess certain qualitative factors to determine whether impairment wasis likely including: our market capitalization, capital adequacy, continued performance compared to peers, and continued improvement in asset quality trends, among others. Based on ourThis qualitative assessment we were not required to perform the two-step impairment test ascan be subjective in nature and includes a certain amount of December 31, 2017.
Goodwill may also be tested for impairment on an interim basis if circumstances change or an event occurs between annual tests that wouldmanagement judgment in determining whether it is more likely than not reduce thethat a reporting unit’s fair value of the reporting unit belowis less than its carrying amount. Significant judgment
In the event we perform an impairment test, the determination of fair value is applied when goodwill is assessed for impairment. This judgment includesbased on a combination of valuation techniques which include the income approach using the discounted cash flow method and market approach using the guideline public company method and guideline transaction method. These valuation approaches incorporate management assumptions and estimates including developing cash flow projections, selecting appropriate discount rates, calculation of a terminal growth rate, minimum target capitalization levels, identifying relevant market comparables, incorporating generalcurrent and projected economic and market conditions, and selecting an appropriate control premium. The
Management reviewed and assessed events and conditions during the three months ended December 31, 2023, including macroeconomic and market factors, industry and banking sector events, Company-specific stock price and performance indicators, a comparison of management’s forecast and assumptions to those used in its September 30, 2023 quantitative step 1 impairment test. Based on these considerations, management concluded that it was not more-likely-than-not that the fair value of either of goodwill was impaired as of December 31, 2023.

33


Impact if Actual Results Differ From Estimates and Judgments - Changes in qualitative factors assessed, changes to assumptions used in the impairment test, selection and weighting of the various fair value techniques, mayand downturns in economic or business conditions, could have a significant adverse impact on the carrying value of goodwill and could result in impairment losses which could have a higher or lowermaterial impact our financial condition and earnings. We performed a goodwill impairment quantitative test as of September 30, 2023 and based on this analysis we concluded the fair value. Judgmentvalue of the Company exceeded the carrying value by 15.4% using a discount rate of 13.6% for the income approach. Management performed a sensitivity analysis of the discount rate used in the income approach of the goodwill impairment analysis and a 50 basis point increase to the discount rate would result in the fair value of the Company exceeding the carrying amount by 10.9% a reduction of 4.5%.
Goodwill is applieddiscussed in determining the weighting that is most representative of fair value.more detail in Note 5 to our Consolidated Financial Statements presented this Report.
Income Taxes
The provision for income taxes is based on income reported for financial statement purposes, and differs from the amount of taxes currently payable, since certain income and expense items are reported for financial statement purposes in different periods than those for tax reporting purposes. Taxes are discussed in more detail in Note 10 to our Consolidated Financial Statements presented elsewhere in this Report. Accrued taxes represent the net estimated amount due or to be received from taxing authorities. In estimating accrued taxes, we assess the relative merits and risks of the appropriate tax treatment of transactions taking into account statutory, judicial, and regulatory guidance in the context of our tax position.Description - We account for income taxes usinguse the asset and liability approach, the objectivemethod of accounting for income taxes in which is to establish deferred tax assets and liabilities are established for the temporary differences between the financial reporting basis and the tax basis of our asset and liabilities. The realization of the net deferred tax asset generally depends upon future levels of taxable income and the existence of prior years’ taxable income, to which “carry back” refund claims could be made. A valuation allowance is maintained, when necessary, to reduce deferred tax assets and liabilities at enacted tax rates expectedthat management estimates are more likely than not to be in effect when such amountsunrealizable based on available evidence at the time the estimate is made. Furthermore, tax positions that could be deemed uncertain are realized or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management,required to be disclosed and reserved for if it is more likely than not that some portion,the position would not be sustained upon audit examination. Taxes are discussed in more detail in Note 11 to our Notes to Consolidated Financial Statements presented in this Report.
Subjective Estimates and Judgments- Significant management judgment is required in determining income tax expense and deferred tax assets and liabilities. Some judgments are subjective and involve estimates and assumptions about matters that are inherently uncertain. In determining the valuation allowance, we use historical and forecasted future operating results. In determining the level of reserve needed for uncertain tax positions, we consider relevant current legislation and court rulings, among other authoritative items, to determine the level of exposure inherent in our tax positions. Management believes that the accounting estimate related to the valuation allowance and uncertain tax positions are a critical accounting estimate because the underlying assumptions can change from period to period.
Impact if Actual Results Differ From Estimates and Judgments - Although management believes that the judgments and estimates used are reasonable, should actual factors and conditions differ materially from those considered by management, the actual realization of the net deferred tax asset and tax positions taken could differ materially from the amounts recorded in the financial statements. If we are not able to realize all or all,part of our net deferred tax asset in the future or if a tax position is overturned by a taxing authority, an adjustment to the deferred tax asset will notvaluation allowance would be realized. In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of any cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income and taxable income, applicable tax planning strategies, and assessments of current and future economic and business conditions. This analysis is updated quarterly and adjusted as necessary.

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Section 382 of the Internal Revenue Code imposes a limitation (“382 Limitation”) on a corporation’s abilitycharged to use any net unrealized built in losses and other tax attributes, such as net operating loss and tax credit carry-forwards, when it undergoes a 50% ownership change over a designated testing period not to exceed three years (“382 Ownership Change”). As a result of the acquisition on July 29, 2016, Wilshire Bancorp underwent a 382 Ownership Change resulting in a 382 Limitation to its net operating loss and tax credit carry-forwards. Wilshire Bancorp did not have a net unrealized built in loss as of the 382 Ownership Change date. Given the applicable 382 Limitation, we expect to fully utilize Wilshire Bancorp’s net operating loss and tax credit carry-forwards before expiration. However, future transactions, such as issuances of common stock or sales of shares of our stock by certain holders of our shares, including persons who have held, currently hold or may accumulate in the future 5% or more of our outstanding common stock for their own account, could trigger a future Section 382 Ownership Change which could limit the our use of these tax attributes.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). Among other changes, the Tax Act reduces the U.S. federal corporate tax rate from 35% to 21%. We have calculated our best estimate of the impact of the Act in our year end income tax provision in accordance with our understanding of the Act and guidance available and as a result have recorded $25.42 million as additional income tax expense in the fourth quarter of 2017, the period insuch determination was made which the legislation was enacted. See Note 10 to the consolidated financial statements for further details.


could have a material impact on our earnings.
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Results of Operations
Operations Summary
Our most significant source of income is net interest income, which is the difference between our interest income and our interest expense. Generally, interest income is generated from the loans we extend to our customers, our investments and investments,interest earning cash; and interest expense is generated from interest bearing deposits our customers have with us and from our borrowings that we may have, such as FHLB advances, federal funds purchased, and subordinated debentures.or debt. Our ability to generate profitable levels of net interest income is largely dependent on our ability to manage the levels of interest earning assets and interest bearing liabilities, and the rates received or paid on them, as well as our ability to maintain sound asset quality and appropriate levels of capital and liquidity. As mentioned above, interest income and interest expense may fluctuate based on factors beyond our control, such as economic or political conditions.conditions and policies.
We attempt to minimize the effect of interest rate fluctuations on net interest margin by monitoring our interest sensitive assets and our interest sensitive liabilities. Net interest income can be affected by a change in the composition of assets and liabilities, such as replacing higher yielding loans with a like amount of lower yielding investment securities. Changes in the level of nonaccrual loans and changes in volume and interest rates can also affect net interest income. Volume changes are caused by differences in the level of interest earning assets and interest bearing liabilities. Interest rate changes result from differences in yields earned on assets and rates paid on liabilities.
TheOur other source of our income is noninterest income, including service charges and fees on deposit accounts, loan servicing fees, fees from trade finance activities, net gains on sale of loans that were held for sale and investment securities available for sale,AFS, and other income and fees.
Our noninterest income can be reduced by charges for other than temporary impairment on investment securities.
In addition toexpenses consist of interest expense, our income is impacted bythe provisions for loancredit losses, and noninterest expense,expenses, which are primarily salaries and benefits and occupancy expense. The following table presents our condensed consolidated statements of income and the increaseschanges year over year.
 Year Ended December 31, 2023Increase
(Decrease)		Year Ended December 31, 2022Increase
(Decrease)		Year Ended December 31, 2021
Amount%Amount%
(Dollars in thousands)
Interest income$1,048,878 $332,763 46 %$716,115 $149,583 26 %$566,532 
Interest expense523,017 385,323 280 %137,694 83,932 156 %53,762 
Net interest income525,861 (52,560)(9)%578,421 65,651 13 %512,770 
Provision (credit) for credit losses29,100 19,500 203 %9,600 21,800 N/A(12,200)
Noninterest income45,577 (5,820)(11)%51,397 7,803 18 %43,594 
Noninterest expense364,451 40,281 12 %324,170 30,878 11 %293,292 
Income before income tax provision177,887 (118,161)(40)%296,048 20,776 8 %275,272 
Income tax provision44,214 (33,557)(43)%77,771 7,071 10 %70,700 
Net income$133,673 $(84,604)(39)%$218,277 $13,705 7 %$204,572 
 Year Ended December 31, 2017 Increase Year Ended December 31, 2016 Increase Year Ended December 31, 2015
  Amount %  Amount % 
 (Dollars in thousands)
Interest income$572,104
 $150,170
 36% $421,934
 
$108,274
 35% $313,660
Interest expense90,724
 32,145
 55% 58,579
 17,961
 44% 40,618
Net interest income481,380
 118,025
 32% 363,355
 90,313
 33% 273,042
Provision for loan losses17,360
 8,360
 93% 9,000
 1,000
 13% 8,000
Noninterest income66,415
 14,596
 28% 51,819
 8,128
 19% 43,691
Noninterest expense266,601
 51,626
 24% 214,975
 61,591
 40% 153,384
Income before income tax provision263,834
 72,635
 38% 191,199
 35,850
 23% 155,349
Income tax provision124,389
 46,937
 61% 77,452
 14,361
 23% 63,091
Net income$139,445
 $25,698
 23% $113,747
 $21,489
 23% $92,258

Net Income
Our net income was $139.4$133.7 million for 20172023 compared to $113.7with $218.3 million for 20162022 and $92.3$204.6 million for 2015.2021. Our diluted earnings per common share based on fully diluted shares were $1.03, $1.10totaled $1.11, $1.81, and $1.16$1.66 for 2017, 2016the years 2023, 2022, and 2015,2021, respectively. The return on average assets was 1.02%0.67%, 1.10%1.20%, and 1.25%1.17% and the return on average stockholders’ equity was 7.31%6.48%, 8.47%10.73%, and 10.11%9.88% for 2017, 2016the years 2023, 2022, and 2015,2021, respectively. The decline in return on average assets and average stockholders’ equity was due to the enactment of the Tax Act on December 22, 2017 which resulted in a one-time incremental income tax provision expense from the reassessment of our net deferred tax assets and investments in affordable housing partnerships at a lower corporate tax rate. The total impact to tax provision as a result of the reassessment was $25.4 million consisting of $23.8 million related to our adjustment of our net deferred tax assets and $1.6 million for the adjustment to our investments in affordable housing partnerships.

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Impact of Acquisitions
The comparability of our operating results is affected by our acquisition of Wilshire Bancorp in July 2016. We acquired $4.63 billion in total assets from Wilshire at the time of the acquisition. The acquisition was accounted for using the acquisition method of accounting and, accordingly, Wilshire’s operating results have been included in the consolidated financial statements from the acquisition date. In addition to Wilshire, we acquired Foster Bancshares and Pacific International Bancorp in 2013. Financial information for the year 2017 reflects a full year of combined operations subsequent to the merger with Wilshire, while 2016 reflects seven months of stand-alone operations and five months of combined operations.
Income before income tax provision for the year ended December 31, 2017 and 2016 was impacted by the accretion of discounts and the amortization of premiums relating to past acquisitions. The following table summarizes the accretion and amortization adjustments that are includeddecrease in net income for 2023 compared with 2022 was primarily due to increases in interest expense, provision for credit losses and noninterest expense. The increase in net income for 2022 compared with 2021 was due primarily to an increase in net interest income, offset partially by increases in the year ended December 31, 2017provision for credit losses and 2016:noninterest expense.
35
  Year Ended December 31,
  2017 2016 2015
  (Dollars in thousands)
Accretion on purchased non-impaired loans $18,372
 $9,330
 $9,840
Accretion on purchased credit-impaired loans 21,542
 15,817
 7,179
Amortizations of premium on low income housing tax credits (338) (127) —
Amortization of premiums on acquired FHLB borrowings 1,597
 973
 384
Accretion of discounts on acquired subordinated debt (1,045) (539) (169)
Amortization of premiums on acquired time deposits and savings 4,903
 5,857
 186
Amortization of core deposit intangibles (2,703) (1,732) (1,068)
Total acquisition accounting adjustments $42,328
 $29,579
 $16,352
Merger-related expenses (1,781) (16,914) (1,540)
Total $40,547
 $12,665
 $14,812


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Net Interest Margin and Net Interest Rate Spread
We analyze our earnings performance using, among other measures, the net interest spread and net interest margin. The net interest spread represents the difference between the weighted average yield earned on interest earning assets and the weighted average rate paid on interest bearing liabilities. Net interest income, when expressed as a percentage of average total interest earning assets, is referred to as the net interest margin. Our net interest margin is affected by changes in the yields earned on assets and rates paid on liabilities, as well as the ratio of the amounts of interest earning assets to interest bearing liabilities.
Interest rates charged on our loans are affected principally by the demand for such loans, the supply of money available for lending purposes, the interest rate environment, and other competitive factors. These factors are in turn affected by general economic conditions and other factors beyond our control, such as federal economic policies, the general supply of money in the economy, legislative tax policies, governmental budgetary matters, and the actions of the FRB.
36


The following table presentstables present our net interest margin, net interest rate spread, and our condensed consolidated daily average balance sheet information,of major assets and liabilities, together with interest rates earned and paid on the various sources and uses of funds for the periods indicated:
 Year Ended December 31,
 202320222021
 Average
Balance		Interest
Income/
Expense		Average
Yield/
Rate		Average
Balance		Interest
Income/
Expense		Average
Yield/
Rate		Average
Balance		Interest
Income/
Expense		Average
Yield/
Rate
 (Dollars in thousands)
INTEREST EARNING ASSETS:
Loans (1) (2)
$14,732,166 $892,563 6.06 %$14,634,627 $660,732 4.51 %$13,343,431 $528,174 3.96 %
Investment securities AFS and HTM (3)
2,262,840 66,063 2.92 %2,415,621 52,220 2.16 %2,392,589 35,492 1.48 %
Interest earning cash and deposits at other banks1,685,462 87,361 5.18 %116,689 1,295 1.11 %774,756 1,302 0.17 %
FHLB stock and other investments47,249 2,891 6.12 %59,624 1,868 3.13 %69,254 1,564 2.26 %
Total interest earning assets18,727,717 1,048,878 5.60 %17,226,561 716,115 4.16 %16,580,030 566,532 3.42 %
Total noninterest earning assets1,078,446 1,005,048 887,635 
Total assets$19,806,163 $18,231,609 $17,467,665 
INTEREST BEARING LIABILITIES:
Deposits:
Money market, interest bearing demand and savings deposits$4,858,919 $161,751 3.33 %$6,517,879 $72,763 1.12 %$5,967,253 $26,490 0.44 %
Time deposits6,409,056 279,480 4.36 %3,084,851 42,076 1.36 %3,178,722 15,521 0.49 %
Total interest bearing deposits11,267,975 441,231 3.92 %9,602,730 114,839 1.20 %9,145,975 42,011 0.46 %
FHLB and FRB borrowings1,618,292 69,365 4.29 %528,342 11,525 2.18 %208,721 2,561 1.23 %
Convertible notes, net77,848 1,925 2.47 %216,654 5,289 2.44 %215,633 5,289 2.45 %
Subordinated debentures, net103,277 10,496 10.02 %102,037 6,041 5.84 %100,848 3,901 3.82 %
Total interest bearing liabilities13,067,392 523,017 4.00 %10,449,763 137,694 1.32 %9,671,177 53,762 0.56 %
Noninterest bearing liabilities and equity:
Noninterest bearing demand deposits4,362,043 5,569,542 5,581,832 
Other liabilities315,063 178,277 143,203 
Stockholders’ equity2,061,665 2,034,027 2,071,453 
Total liabilities and stockholders’ equity$19,806,163 $18,231,609 $17,467,665 
Net interest income$525,861 $578,421 $512,770 
Net interest margin2.81 %3.36 %3.09 %
Net interest spread (4)
1.60 %2.84 %2.86 %
Cost of funds (5)
3.00 %0.86 %0.35 %
Cost of deposits2.82 %0.76 %0.29 %
 Year Ended December 31,
 2017 2016 2015
 
Average
Balance
 
Interest
Income/
Expense
 
Average
Yield/
Rate
 
Average
Balance
 
Interest
Income/
Expense
 
Average
Yield/
Rate
 
Average
Balance
 
Interest
Income/
Expense
 
Average
Yield/
Rate
 (Dollars in thousands)
INTEREST EARNING ASSETS:                
Loans(1)(2)(3)
$10,642,349
 $529,760
 4.98% $8,121,897
 $392,127
 4.83% $5,846,658
 $291,344
 4.98%
Securities(3)
1,679,468
 36,917
 2.20% 1,276,068
 25,442
 1.99% 871,010
 18,611
 2.14%
FRB and FHLB stock and
other investments
360,086
 5,427
 1.51% 281,824
 4,365
 1.55% 313,904
 3,705
 1.18%
Total interest earning assets12,681,903
 572,104
 4.51% 9,679,789
 421,934
 4.36% 7,031,572
 313,660
 4.46%
Total noninterest earning assets967,060
     662,274
     357,958
    
Total assets$13,648,963
     $10,342,063
     $7,389,530
    
                  
INTEREST BEARING LIABILITIES:                
Deposits:                 
Demand, interest bearing$3,490,440
 31,856
 0.91% $2,587,548
 21,136
 0.82% 1,697,033
 12,430
 0.73%
Savings268,292
 1,354
 0.50% 234,332
 1,282
 0.55% 193,610
 1,670
 0.86%
Time certificates4,037,259
 41,692
 1.03% 3,219,484
 25,673
 0.80% 2,377,993
 19,312
 0.81%
FHLB advances and
federal funds purchased
787,119
 10,706
 1.36% 619,557
 7,560
 1.22% 503,127
 5,645
 1.12%
Other borrowings96,363
 5,116
 5.24% 64,165
 2,928
 4.49% 40,694
 1,561
 3.78%
Total interest bearing liabilities8,679,473
 90,724
 1.05% 6,725,086
 58,579
 0.87% 4,812,457
 40,618
 0.84%
Noninterest bearing liabilities and equity:                
Demand deposits2,955,895
     2,191,620
     1,611,068
    
Other liabilities105,849
     82,403
     53,396
    
Stockholders’ equity1,907,746
     1,342,954
     912,609
    
Total liabilities and stockholders’ equity$13,648,963
     $10,342,063
     $7,389,530
    
                 
Net interest income  $481,380
     $363,355
     $273,042
  
Net interest margin    3.80%     3.75%     3.88%
Net interest spread(4)
    3.46%     3.49%     3.62%
Cost of funds(5)
    0.78%     0.66%     0.63%
(1) Interest income on loans includes accretion of net deferred loan origination fees and costs, prepayment fees received on loan pay-offspayoffs and accretion of discounts on acquired loans. See the table below for detail. The average balance of loans is net of deferred loan origination fees and costs.
(2) Average balances of loans are net of deferred loan origination fees and costs and include nonaccrual loans and loans held for sale.
(3) Interest income and yields are not presented on a tax-equivalent basis.
(4) Yield on interest earning assets minus cost of interest bearing liabilities.
(5) YieldCost on interest bearing liabilities and noninterest bearing deposits.

37
33



The following table presents net loan origination fees, loan prepaymentsprepayment fee income, interest reversed for nonaccrual loans, and discount accretion income included as part of loan interest income for the years indicated:
Year ended December 31, Net Loan Origination Fees Loan Prepayment Fee Income Interest Reversed for Nonaccrual Loans, Net of Income Recognized Accretion of Discounts on Acquired Loans
  (Dollars in thousands)
2017 $1,485
 $3,963
 $(419) $39,914
2016 $1,798
 $3,491
 $(483) $25,147
2015 $1,540
 $2,202
 $27
 $17,019
Year Ended December 31,Net Loan Origination Fees (Costs)Loan Prepayment Fee IncomeInterest Reversed for Nonaccrual Loans, Net of Income RecognizedAccretion of Discounts on Acquired Loans
(Dollars in thousands)
2023$8,657 $2,313 $(2,926)$2,789 
2022$9,990 $5,350 $(2,523)$2,630 
2021$14,950 $4,106 $(3,184)$9,925 
Net Interest Income
Net interest income was $481.4$525.9 million for 2017,2023, compared to $363.4with $578.4 million for 20162022 and $273.0$512.8 million for 2015.2021. Changes in net interest income are a function of changes in interest rates and volumevolumes of interest earning assets and interest bearing liabilities. The table below sets forth information regarding the changes in interest income and interest expense for the periods indicated. The total change for each category of interest earning assets and interest bearing liabilities is segmented into the change attributable to variations in volume (changes in volume multiplied by the old rate) and the change attributable to variations in interest rates (changes in rates multiplied by the old volume). Nonaccrual loans are included in average loans used to compute this table.
 For the year ended December 31,
 2017 Compared to 2016 2016 Compared to 2015
 
Net
Increase
 Change due to 
Net
Increase
(Decrease)
 Change due to
 Rate Volume Rate Volume
 (Dollars in thousands)
INTEREST INCOME:           
Interest and fees on loans$137,633
 $12,512
 $125,121
 $100,783
 $(9,327) $110,110
Interest on securities11,475
 2,810
 8,665
 6,831
 (1,318) 8,149
Interest on other investments1,062
 (120) 1,182
 660
 1,068
 (408)
TOTAL INTEREST INCOME$150,170
 $15,202
 $134,968
 $108,274
 $(9,577) $117,851
INTEREST EXPENSE:           
Interest on demand deposits$10,720
 $2,697
 $8,023
 $8,706
 $1,567
 $7,139
Interest on savings72
 (104) 176
 (388) (692) 304
Interest on time deposits16,019
 8,608
 7,411
 6,361
 (355) 6,716
Interest on FHLB advances and federal funds purchased3,146
 937
 2,209
 1,915
 526
 1,389
Interest on other borrowings2,188
 545
 1,643
 1,367
 334
 1,033
TOTAL INTEREST EXPENSE$32,145
 $12,683
 $19,462
 $17,961
 $1,380
 $16,581
NET INTEREST INCOME$118,025
 $2,519
 $115,506
 $90,313
 $(10,957) $101,270
 Year Ended December 31,
 2023 Compared with 20222022 Compared with 2021
 Net Increase (Decrease)Change due toNet Increase (Decrease)Change due to
 RateVolumeRateVolume
 (Dollars in thousands)
INTEREST INCOME:
Loans, including fees$231,831 $227,398 $4,433 $132,558 $78,519 $54,039 
Investment securities AFS and HTM13,843 17,323 (3,480)16,728 16,386 342 
Interest earning cash and deposits at other banks86,066 18,458 67,608 (7)1,915 (1,922)
FHLB stock and other investments1,023 1,477 (454)304 544 (240)
TOTAL INTEREST INCOME$332,763 $264,656 $68,107 $149,583 $97,364 $52,219 
INTEREST EXPENSE:
Money market, interest bearing demand and savings deposits$88,988 $111,871 $(22,883)$46,273 $43,796 $2,477 
Time deposits237,404 159,282 78,122 26,555 27,027 (472)
FHLB and FRB borrowings57,840 18,433 39,407 8,964 3,019 5,945 
Convertible notes, net(3,364)67 (3,431)— (25)25 
Subordinated debentures, net4,455 4,381 74 2,140 2,093 47 
TOTAL INTEREST EXPENSE$385,323 $294,034 $91,289 $83,932 $75,910 $8,022 
NET INTEREST INCOME$(52,560)$(29,378)$(23,182)$65,651 $21,454 $44,197 
Net interest income before provision for loancredit losses decreased by $52.6 million, or 9%, for 2023 compared with 2022. The decrease in net interest income was driven by a higher cost of funds and increases in average interest bearing deposits and short-term borrowings, partially offset by expanding yields on interest earning assets and higher average balances in loans and interest earning cash and deposits in other banks. The expanding interest earning asset yields and higher deposit costs reflected rising market interest rates during the period. The upper range of the target Federal Funds rate increased to 5.50% at December 31, 2023, up from 4.50% at December 31, 2022. The increase in average interest earning cash and deposits at other banks reflected a conservative approach to liquidity risk management, given the banking industry volatility caused by multiple bank failures in the first half of 2023. The increase in the average interest earning cash and deposits in other banks was largely funded through FRB’s BTFP borrowings.
38


Net interest income before provision for credit losses increased by $118.0$65.7 million, or 32%13%, during 2017.for 2022 compared with 2021. The increase was primarily due to increases in loans yields, which increased by 55 basis points for 2022 compared with 2021, and an increase in average interest earning assets by 31% during the year which resulted in an increase of $135.0 million in interest income due to volume. Interest bearing liabilities increased by 29% for 2017 compared to the previous year, which resulted in an increase of $19.5 million in interest expense due to volume. Although yields on interest earnings assets increased for 2017 compared to 2016, the increase was largely offset by the increase in cost of deposits for the same period.
Net interest income increased $90.3 million, or 33%, during 2016. The increase was primarily dueloan balances. These increases contributed to an increase in averagetotal interest earning assets by 38% during the year which resulted in anincome of $149.6 million for 2022 compared with 2021. The increase of $117.9 million in interest income due to volume. Interest bearing liabilities increased 40% during the year. The correspondingwas partially offset by an increase in interest expense dueof $83.9 million, driven by an increase in the cost of interest bearing deposits, which grew by 74 basis points for 2022 compared with 2021, and reflected higher market interest rates Federal Funds target rate hikes during 2022. The upper range of the Federal Funds target rate increased to volume was $16.6 million. The growth in interest earning assets was partially offset by decreasing yields in both loans and investment securities throughout the same period.4.50% as of December 31, 2022, up from 0.25% as of December 31, 2021.
Average interest earnings assets and liabilities for 2017 included the full year impact from assets acquired and liabilities assumed from Wilshire, while average interest earnings assets and liabilities for 2016 included only five months of asset and liability balances acquired from Wilshire.Interest Income

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Interest Income
Interest income was $572.1$1.05 billion for 2023, compared with $716.1 million for 2017, compared to $421.92022, and $566.5 million for 2016 and $313.7 million for 2015.2021. The yield on average interest earning assets was 4.51%5.60% for 2017,2023, compared to 4.36%with 4.16% for 20162022, and 4.46%3.42% for 20152021.
Comparison of 20172023 with 2016
The increase in interest income of $150.2 million, or 36%, for 2017 compared to 2016 was primarily a result of the growth in total loans and investments. The increase in 2017 was a result of both organic growth and the full year impact of the assets acquired from Wilshire compared to only a five month impact of assets acquired from Wilshire for 2016. Average total loans increased $2.52 billion in 2017 compared to 2016 and total investments increased $403.4 million in the same period. Discount accretion income on acquired loans increased in 2017 totaling $39.9 million compared to $25.1 million for 2016. Accretion income on loans acquired from Wilshire was recognized throughout the entire year in 2017, whereas in 2016, accretion income was recorded in only the last five months of the year subsequent to the acquisition in July 2016.
Comparison of 2016 with 20152022
The increase in interest income of $108.3$332.8 million, or 35%46.5%, for 20162023 compared to 2015with 2022 was primarily a result of income ondriven by higher loan yields, which reflected new loans and investments acquired from the acquisition of Wilshire in July 2016. The fair value of loans acquired from Wilshireoriginated at acquisition totaled $3.82 billionhigher average interest rates and the fair valueupward repricing of investments totaled $478.9 million. Thevariable rate loans in a rising interest rate environment, higher volume of average balancesinterest earning cash and deposits, and expanding yields on all other interest earning assets.
Comparison of gross loans increased by $2.28 billion during the year and average investments increased by $405.1 million for the same period. This2022 with 2021
The increase in interest income from the increaseof $149.6 million, or 26.4%, for 2022 compared with 2021 was primarily due to expanding loan yields, growth in overallaverage loans, was partially offset by a decline in interest income from a reduction in loan yield. Loan discount accretion increased by $8.1 million, from $17.0 million for the year ended December 31, 2015 to $25.1 million for the year ended December 31, 2016.and higher yields on investment securities.
Interest Expense
DepositsDeposits
Interest expense on deposits was $74.9$441.2 million for 20172023, compared to $48.1with $114.8 million for 20162022, and $33.4$42.0 million for 2015.2021. The average cost of deposits was 0.70%2.82% for 2017,2023, compared to 0.58%with 0.76% for 20162022, and 0.57%0.29% for 2015.2021. The average cost of interest bearing deposits was 0.96%,3.92% for 2023, compared to 0.80%with 1.20% for 20162022, and 0.78%0.46% for 2015.2021.
Comparison of 20172023 with 20162022
The increase in interest expense on total deposits of $26.8$326.4 million, or 56%284%, for 2017,2023 compared to 2016with 2022 was due to a higher cost of interest bearing deposits, growth in average time deposits, and an increase in interest bearing liabilities in addition to an overallaverage borrowings, reflecting usage of the BTFP. The increase in rates offered in 2017. Federal funds rates was increased by the Federal Open Market Committee (“FOMC”) in June of 2017 and again in December of 2017. As of result of the 25 basis point increase in interest rates in June 2017, many of our deposits were priced higher and time deposits were renewed and opened at higher interest rates increasing our total cost of deposits for 2017. In addition, averagewas driven by rising market interest rates, a remix of low-yielding deposits for 2017 included a full year of balances assumed from Wilshire while 2016 only reflected five months of assumed deposits in the averageinto higher-cost options, and deposit balance. The average balance of noninterest bearing deposits accounted for 27.5% of total average deposits at December 31, 2017 compared to 26.6% at December 31, 2016.pricing competition.
Comparison of 20162022 with 20152021
The increase in interest expense on total deposits of $14.7$72.8 million, or 44%173%, for 2016,2022 compared to 2015with 2021 was primarily due to an increase in interest bearing deposits acquired from Wilshire. The fair value of deposits assumed from Wilshire at acquisition was $3.81 billion. The average balancea higher cost of interest bearing deposits, increased by $1.77 billion in 2016 compared to 2015. In addition, the averagewhich reflected a rapidly rising interest rate on average interest bearing deposits increased by 2 basis points. The average balanceenvironment.
FHLB and FRB Borrowings
FHLB and FRB borrowings consist of noninterest bearing deposits accounted for 26.6% of total average deposits at December 31, 2016, compared to 27.4% at December 31, 2015.
Borrowings
Borrowings include borrowingsadvances from the FHLB federal funds purchased, and subordinated debentures.FRB, including the BTFP. As part of our asset-liability management, we utilize FHLB advancesand FRB borrowings to supplement our deposit source of funds. Therefore, there may be fluctuations in these balances depending on the short-term liquidity and longer-term financing needs of the Bank.
Average FHLB advances and federal funds purchasedFRB borrowings were $787.1$1.62 billion for 2023, compared with $528.3 million in 2017, compared to $619.62022, and $208.7 million in 2016 and $503.1 million in 2015.2021. Interest expense on FHLB advances and federal funds purchasedFRB borrowings was $10.7$69.4 million for 20172023 compared to $7.6with $11.5 million for 20162022, and $5.6$2.6 million for 2015.2021. The average cost of FHLB advances and federal funds purchasedFRB borrowings was 1.36%4.29% for 2017,2023, compared with 2.18% for 2022, and 1.23% for 2021. Given the attractive cost and structure of the BTFP, we utilized it in 2023 to 1.22%bolster our on-balance sheet liquidity in response to the banking industry disruption caused by the multiple bank failures in the first half of the year.
39


Convertible Notes
In 2018, we issued $217.5 million in senior convertible notes. Interest expense on convertible notes was $1.9 million for 20162023 compared with $5.3 million for 2022 and 1.12% for 2015.2021. The average cost of FHLB advancesour convertible notes for 2023 was 2.47% compared with 2.44% for 2022 and federal funds purchased includes2.45% for 2021. The cost of our convertible notes consisted of the 2.00% coupon rate and non-cash interest expense from the capitalization of issuance cost. On January 1, 2021, we early adopted ASU 2020-06, which eliminated the discount on our convertible notes and reduced interest expense that was previously recognized on amortization of premiumsthe discount.
During the year ended December 31, 2023, we repurchased our notes in the aggregate principal amount of $19.9 million and recorded a gain on advances acquired from prior acquisitions. Total amortization for 2017 was $1.6debt extinguishment of $405 thousand. The repurchased notes were immediately cancelled subsequent to repurchase. On May 15, 2023, most holders of our convertible notes exercised their right to put their notes and therefore we paid off $197.1 million compared to $973 thousandof convertible note principal in 2016cash. During the years ended December 31, 2022 and $384 thousand in 2015. We repaid $1.02 billion in FHLB advances in 20172021, there were no repurchases or put options.

Subordinated Debentures
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Table of Contents


with an average rate of 1.02%. In addition, we borrowed $1.49 billion in FHLB advances and federal funds purchased with an average rate of 1.39% in 2017.
Other borrowings includeThe subordinated debentures which bear interest at the 3-month LIBORChicago Mercantile Exchange term Secured Financing Overnight Rate (“SOFR”) rate, plus a designated spread. WithPrior to LIBOR cessation at June 2023, the acquisition of Wilshire, we assumed four subordinated debentures atinterest rate was tied to the 3-month LIBOR rate, plus a fair value of $56.9 million.designated spread. There were no other changes in our balance of subordinated debentures during 20162023 or 2017, except for2022 aside from the increaseincreases related to the discount accretion on subordinated debentures acquired from previous acquisitions. Interest expense on subordinated debentures was $10.5 million for 2023 compared with $6.0 million for 2022, $3.9 million for 2021. The average rate on other borrowings increased to 10.02% for 2023, compared with 5.84% for 2022, and 3.82% for 2021. The change in cost of other borrowings for 2023 and 2022 compared with prior years was due to changes in the 3-month SOFR and 3-month LIBOR rates.
Provision for LoanCredit Losses
The provision for loancredit losses reflects our judgment of the current period cost associated with credit risk inherent in our loan portfolio. The loan loss provision for credit losses for each period is dependent upon many factors, including loan growth, net charge-offs,charge offs, changes in the composition of the loan portfolio, delinquencies, assessments by management, third parties’ and regulators’ examination of the loan portfolio, the value of the underlying collateral on problem loans, and the general economic conditions in our market areas.areas, and future projections of the economy. Specifically, the provision for loancredit losses represents the amount charged against current period earnings to achieve an allowance for loancredit losses that, in our judgment, is adequate to absorb probable incurredlifetime losses inherent in our loan portfolio. Periodic fluctuations in the provision for loancredit losses result from management’s assessment of the adequacy of the allowance for loancredit losses; however, actual loancredit losses maycould potentially vary in material respectsmaterially from current estimates. If the allowance for loancredit losses is inadequate, we may be required to record additional loan loss provision for credit losses, which maycould have a material adverse effect on our business, and our financial condition,. and results of operations.
Comparison of 20172023 with 20162022
The provision for loancredit losses was $17.4$29.1 million for 2017,2023, an increase of $8.4$19.5 million or 93%, from $9.0$9.6 million for 2016. 2022. The increase in provision for credit losses was largely due to increased net charge offs. During 2023, we recorded an idiosyncratic full charge off of $23.4 million related to a borrower that entered into Chapter 7 liquidation in August 2023. In comparison, in 2022, we recorded $17.3 million in recoveries from a previously charged off loan, resulting in total net recoveries in 2022. The increase to the provision for credit losses due to charge offs was partially offset by the year over year decline loans receivable, which reduced the required ACL balance. The allowance for credit losses coverage ratio was 1.15% of loans receivable at December 31, 2023, compared with 1.05% at December 31, 2022.
Comparison of 2022 with 2021
The provision for credit losses was calculated based on net charge offs$9.6 million for 2022, an increase of $21.8 million from $12.2 million duringin negative provision for credit losses for 2021. The positive provision for credit losses for the year ended December 31, 2022, reflected loan growth and an increase in the requiredACL coverage ratio of loans due to macroeconomic concerns. This increase was partially offset by the continued de-risking of our loan portfolio and continued improvements in our overall credit quality. During the first quarter of 2022, we had a large recovery of $17.3 million on a previously charged off loan, which reduced provision for credit losses in 2022. The allowance for loancredit losses primarily due to an increase in loan volume which also contributed to the increase in provision.coverage ratio was 1.05% of loans receivable at December 31, 2022, compared with 1.01% at December 31, 2021.
Comparison of 2016 with 2015
40
The provision for loan losses was $9.0 million for 2016, an increase of $1.0 million, or 13%, from $8.0 million for 2015. The provision was calculated based on net charge offs of $6.1 million during the year and an increase in the required allowance for loan losses primarily due to an increase in loan volume. Loans acquired from Wilshire during 2016 were recorded at fair value and therefore did not significantly impact the provision for loan losses during the year.

See “Financial Condition—Allowance for Loan Losses” for a description of our methodology for determining the allowance for loan losses.Noninterest Income
Noninterest Income
Noninterest income is primarily comprised of service chargesfees on deposit accounts, international service fees (fees received on trade finance letters of credit), wire transfer fees, swap fee income, net gains on sales of SBA and residential mortgage loans, and other fees and income. Noninterest income was $66.4 million for 2017 compared to $51.8 million for 2016 and $43.7 million for 2015.
Comparison of 2017 with 2016
The increase in noninterest income for 2017 over 2016 primarily reflected increases in service charges on deposit accounts, loan servicing fees, net gain on sales of SBA loans, and other income and fees.
Service charges on deposits increased $4.7 million, or 29%, to $20.6 million due mostly to an increase of $2.8 million in analysis fees, charged on demand deposits accounts and an increase of $1.3 million in non-sufficient funds collected from business and personal accounts. The increase in deposits service charges in 2017 was largely due to the full year impact of the increase in deposits from the acquisition of Wilshire.
Loan servicing fees increased by $1.9 million, or 54%, to $5.4 million in 2017 compared to $3.5 million in 2016. The increase inwhich included loan servicing fees, earnings on bank owned life insurance, changes in 2017 was primarily a resultthe fair value of an increase in sales of residential loans and SBA loans in 2016 and 2017. We earn servicing fees on loans we continue to service subsequent to the sale of the loan. As more loans continue to be sold, our servicing fees continue to increase until the loans are paid off.
Net gains on sales of SBA loans increased by $4.0 million, or 46%, to $12.8 million in 2017 from $8.8 million in 2016. The volume of sales of SBA loans and the net gains recorded from the sales are primarily driven by the production of SBA loans which increased during in 2017. SBA loans sold totaled $177.4 million in 2017 compared to $116.1 million in 2016. The increase in SBA loans sold in 2017 was due to the full year operations of the combined bank after the mergerequity investments with Wilshire, while 2016 represented only five months of combined operations.


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Other income and fees increased by $3.1 million, or 27% in 2017 compared to 2016. Loan recoveries on pre-merger charged-off loans and miscellaneous income increased $1.2 million in 2017 and gains on sale of fixed assets increased by $1.0 million in 2017 compared to the previous year mostly due to the sale of a building and associated land at the end of 2017.
Comparison of 2016 with 2015
The increase in noninterest income for 2016 over 2015 primarily reflected increases in service charges on deposit accountsreadily determinable fair value, and other miscellaneous income. Noninterest income was $45.6 million for 2023 compared with $51.4 million for 2022, and fees. These increases were offset by a decrease in net gains on sales of SBA loans.$43.6 million for 2021.
Service charges on deposits increased $3.8 million, or 31%, to $16.0 million due to an increase of $2.2 million in business analysis fees charged and an increase of $1.2 million in non-sufficient funds collected from business and personal accounts. The increase in deposits service charges was largely due to the increase in deposits from the acquisition of Wilshire.
Net gains on sales of SBA loans decreased by $3.9 million, or 31%, to $8.8 million in 2016 from $12.7 million in 2015. The volume of sales of SBA loans and the net gains recorded from the sales are primarily driven by the production of SBA loans which decreased during the year. SBA loans sold during the year totaled $116.1 million in 2016 compared to $165.2 million in 2015.
Other income and fees increased by $3.8 million, or 48%, during 2016 compared to 2015. Miscellaneous income increased $1.8 million in 2016 and fee income from our loan hedging product increased by $789 thousand during the year due to an increase in the volume of transactions. Credit card processing fees also increased by $865 thousand during 2016. Overall other income and fees increased in 2016 compared to 2015 due to the acquisition of Wilshire.
A breakdown of noninterest income by category is shown below:below:
 Year Ended December 31, 2023Increase (Decrease)Year Ended December 31, 2022Increase (Decrease)Year Ended December 31, 2021
 AmountPercent
(%)		AmountPercent
(%)
(Dollars in thousands)
Service fees on deposit accounts$9,466 $528 6 %$8,938 $1,663 23 %$7,275 
International service fees3,365 231 7 %3,134 (452)(13)%3,586 
Wire transfer fees3,322 (155)(4)%3,477 (42)(1)%3,519 
Swap fees711 (1,894)(73)%2,605 1,147 79 %1,458 
Net gains on sales of SBA loans4,097 (12,246)(75)%16,343 7,895 93 %8,448 
Net gains on sales of residential mortgage loans290 (592)(67)%882 (3,553)(80)%4,435 
Other income and fees24,326 8,308 52 %16,018 1,145 8 %14,873 
Total noninterest income$45,577 $(5,820)(11)%$51,397 $7,803 18 %$43,594 
Comparison of 2023 with 2022
The decrease in noninterest income for 2023 compared with 2022 was primarily attributable to lower net gains on sales of SBA loans and swap fee income, and partially offset by an increase in other income and fees.
Swap fees represent income earned from the execution of customer level back-to-back swap transactions. Swap fees for 2023 declined by $1.9 million compared with 2022 due to an overall decline in swap transactions in 2023 compared with 2022.
During the year ended December 31, 2023, we sold $79.1 million in SBA guaranteed loans and recorded $4.1 million in net gains on sale of SBA loans. During the year ended December 31, 2022, we sold $227.3 million in SBA guaranteed loans and recorded $16.3 million in net gains on sale of SBA loans. We elected to not sell any SBA 7(a) loans during the second half of 2023, retaining loan production on our balance sheet instead.
Other income and fees increased for 2023 compared with 2022, primarily due to a $5.8 million gain from a cash distribution from an investment in an affordable housing partnership, which was received in 2023, and a year-over-year increase in the fair value of equity investments.
Comparison of 2022 with 2021
The increase in service fees on deposit accounts for 2022 compared with 2021 was mainly due to increases in commercial deposit fees, including business account analysis fees.
Swap fees represent income earned from the execution of customer level back-to-back swap transactions. The number of swap transactions and their total notional amounts increased in 2022, compared with the prior year, which resulted in an increase in swap fee income for 2022 compared with 2021.
During the year ended December 31, 2022, we sold $227.3 million in SBA guaranteed loans and recorded $16.3 million in net gains on sale of SBA loans. During the year ended December 31, 2021, we sold $102.4 million in SBA guaranteed loans and recorded $8.4 million in net gains on sale of SBA loans. The average weighted premium on SBA loans sold was 7.19% for 2022 compared with 8.25% for 2021.
Net gain on sale of residential mortgage loans decreased in 2022 compared with 2021 due to a decrease in loans sold and a decrease in premiums received. During 2022, we sold $49.1 million in residential mortgage loans compared with $186.5 million residential mortgage loans sold in 2021. The average weighted premium on residential mortgage loans sold was 1.80% for 2022 compared with 2.38% for 2021.
41

 Year Ended December 31, 2017 
Increase
(Decrease)
 Year Ended December 31, 2016 
Increase
(Decrease)
 Year Ended December 31, 2015
(Dollars in thousands) Amount %  Amount % 
Service fees on deposit accounts$20,619
 $4,655
 29 % $15,964
 $3,758
 31 % $12,206
International service fees4,494
 801
 22 % 3,693
 245
 7 % 3,448
Loan servicing fees, net5,433
 1,914
 54 % 3,519
 384
 12 % 3,135
Wire transfer fees5,057
 731
 17 % 4,326
 694
 19 % 3,632
Net gains on sales of SBA loans12,774
 4,024
 46 % 8,750
 (3,915) (31)% 12,665
Net gains on sales of other loans2,927
 7
 — % 2,920
 2,650
 981 % 270
Net gains on sales or called securities available for sale301
 (649) (68)% 950
 526
 124 % 424
Other income and fees14,810
 3,113
 27 % 11,697
 3,786
 48 % 7,911
Total noninterest income$66,415
 $14,596
 28 % $51,819
 $8,128
 19 % $43,691

Noninterest Expense
Noninterest expense is primarily comprised of salaries and benefit expense, occupancy expense, furniture and equipment expense, advertising expenses, professional fees, investment in affordable housing partnership expenses, and other expenses. Noninterest expense was $266.6$364.5 million for 20172023, compared with $324.2 million for 2022, and $293.3 million for 2021. The increase in noninterest expense was $40.3 million, or 12%, for 2023 compared with 2022, and $30.9 million, or 11%, for 2022 compared with 2021. Noninterest expense as a percentage of average assets for 2023 was 1.84%, compared to $215.0 millionwith 1.78% for 20162022 and $153.4 million1.68% for 2015. The increases in2021.
A breakdown of noninterest expenses were $51.6 million, or 24%, for 2017 compared to 2016, and $61.6 million, or 40%, for 2016 compared to 2015.expense by category is provided below:
Year Ended December 31, 2023Increase (Decrease)Year Ended December 31, 2022Increase (Decrease)Year Ended December 31, 2021
AmountPercent
(%)		AmountPercent
(%)
 (Dollars in thousands)
Salaries and employee benefits$207,871 $3,152 2 %$204,719 $29,568 17 %$175,151 
Occupancy28,868 601 2 %28,267 (631)(2)%28,898 
Furniture and equipment21,378 1,944 10 %19,434 1,355 7 %18,079 
Data processing and communications11,606 923 9 %10,683 352 3 %10,331 
Professional fees6,464 150 2 %6,314 (5,854)(48)%12,168 
Amortization of investments in affordable housing partnerships8,195 (547)(6)%8,742 (2,325)(21)%11,067 
FDIC assessments13,296 7,048 113 %6,248 1,139 22 %5,109 
FDIC special assessment3,971 3,971 100 %— — — %— 
Earned interest credit22,399 11,401 104 %10,998 9,156 497 %1,842 
Software impairment— — — %— (2,146)(100)%2,146 
Restructuring costs11,576 11,576 100 %— — — %— 
Other noninterest expense28,827 62 — %28,765 264 1 %28,501 
Total noninterest expense$364,451 $40,281 12 %$324,170 $30,878 11 %$293,292 
Comparison of 20172023 with 20162022
The increase in noninterest expense for 2017 over 20162023 compared with 2022 was primarily driven by restructuring costs, higher earned interest credits, and higher FDIC assessments expense.
Salaries and employee benefits expense increased by $3.2 million, or 1.5%, for 2023 compared with 2022. The increase in salaries and employee benefits was primarily due to inflation and higher rates of compensation in a competitive staffing market. Also included in the 2023 salaries and employee benefits expense was $1.7 million of severance costs incurred in the first quarter related to a staffing rationalization, which reduced the Bank’s workforce by 5%. The number of full-time equivalent employees decreased to 1,244 at December 31, 2023, down from 1,549 at December 31, 2022.
FDIC assessments expense increased by $7.0 million, or 112.8%, for 2023 compared with 2022. The FDIC assessment expense utilizes an initial base assessment rate, which is calculated as a percentage of the Bank’s average consolidated total assets less average tangible equity. In addition to the initial assessment base, adjustments are added based upon the Bank’s regulatory rating and on other financial measures. In 2023, the FDIC annual base assessment rate increased by two basis points industry-wide. In addition, in November 2023, the FDIC approved a special assessment at the rate of approximately 13.4 basis points per year, paid in eight quarterly installments beginning in the first quarter of 2024. This rate will be applied to an assessment base of the insured depository institution’s estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion in estimated uninsured deposits. The increase in FDIC assessment fees for 2023 compared with 2022 was due primarily to the aforementioned increased annual base assessment rate and an additional $4.0 million accrued for the special assessment.
Earned interest credits are provided to certain commercial depositors in the residential mortgage industry to help offset deposit service charges incurred. The earned interest credits are tied to short-term interest rates and have increased with the increases in the Federal Funds rate since mid-2022. Earned interest credits increased $11.4 million for 2023 compared with 2022.
42


Restructuring costs totaled $11.6 million in 2023, and were related to the Company’s strategic reorganization announced in October 2023. Restructuring costs primarily comprised severance costs, planned branch closure charges and professional fees. As part of the restructuring, the Company reduced its workforce by 13% in October 2023, and will consolidate certain branches in the first half of 2024. There were no restructuring costs incurred in 2022.
Comparison of 2022 with 2021
The increase in noninterest expense for 2022 compared with 2021 was due mostly to increases in salaries and employee benefits, occupancyearned interest credits expenses, furniture and equipment advertisingexpenses and marketing,FDIC assessments, partially offset by declines in professional fees, and investmentamortization of investments in affordable housing partnership expenses partially offset by a decline in merger and integrationpartnerships expenses and credit related expenses. Most noninterest expense line items aside from merger and integration expenses and credit related expense increased in 2017 compared to 2016 as expenses for 2017 represented a full year of combined operations after the merger with Wilshire while 2016 represented only five month of combined operations and related expenditures.software impairment.
Salaries and employee benefits totaled $144.7expense increased by $29.6 million for 2017, an increase of $36.7 million, or 34%,2022 compared to $107.9 million for 2016. The increase was comprised of a $28.2 million increase in employee salary expenses and an increase of $8.5 million in employee benefits. These increases primarily reflect increases in the number of full-time equivalent employees to 1,470 at December 31, 2017, from 1,372 as of December 31, 2016, and 938 at December 31, 2015.with 2021. The increase in salaries and employee benefits was due to an increase in full-time employees and because 2017 reflected a full year of combined expenses including staff acquired from Wilshire while 2016 reflected salary and benefit expenses for only the last five months of combined operations.

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Occupancy expense increased $4.0 million, or 16%, to $28.6 million for 2017 compared to $24.6 million for 2016. With the acquisition of Wilshire, we assumed 35 branches offices and six loan production offices. Although some of these locations were subsequently closed in accordance with our branch consolidation plan, the remaining lease locations contributed to the overall increase in occupancy expenses for 2017 compared to 2016. Thecompensation costs, reflecting an increase in expensesemployees, the competitive staffing market, and higher incentive compensation accruals. The number of full-time equivalent employees increased from 1,476 at December 31, 2021 to 1,549 at December 31, 2022.
Professional fees decreased by $5.9 million in 2022 compared with 2021. The decrease in professional fees was due primarily to lower legal fees related to litigation costs and other professional fees.
Earned interest credits increased $9.2 million for 20172022 compared with 2021. Earned interest credits are provided to certain commercial depositors in the residential mortgage industry to help offset deposit service charges incurred. The earned interest credits are tied to the Federal Funds rate and increased as interest rates went up in 2022.
Income Tax Provision
The provision for income taxes for 2023 was $44.2 million, compared with $77.8 million in 2022 and $70.7 million in 2021. The effective income tax rate was 24.86% for 2023 compared with 26.27% for 2022 and 25.68% for 2021. The decrease in effective tax rate for 2023 compared with 2022 was primarily due to the full year of expenditure for leases acquiredbenefit from Wilshire while 2016 expenditures included Wilshire related lease expenses for only the last five months of the year.
Furniture and equipment expenses increased $2.9 million, or 25%, to $14.6 million for 2017 compared to $11.7 million for 2016. The increase in these expenses in 2017 compared to the previous year was also due to the full year of combined furniture and equipment expenses after the merger with Wilshire compared to only five months of expenses after the merger with Wilshire in 2016.
Advertising and marketing expenses increased $3.0 million, or 40%, to $10.3 million for 2017 compared to $7.3 million in 2016. Advertising and marketing expenses for 2017 included $1.5 million in sponsorship fees paid to sponsor the Ladies Professional Golf Association (“LPGA”) Bank of Hope Founders Cup event for the first time in March 2017. The remaining increase in 2017 was due to a full year of expenses for the combined entity after the merger with Wilshire compared to five months of combined expenses for 2016.
Professional fees increased $8.4 million, or 128%, to $15.0 million for 2017 compared to $6.6 million for 2016. The increase in professional fees for 2017 compared 2016 was due to an increase in predecessor external auditor fees as well as additional consulting costs associated with new compliance requirements as a result of exceeding $10 billion in total assets. We also had an increase in legal fees for 2017 compared 2016 due mostly to fees related to the proposed merger with U & I Financial Corp., which was terminated in September 2017.
Investments in affordable housing partnership expenses increased $9.8 million, or 238%, to $13.9 million for 2017 compared to $4.1 million in 2016. In 2017, we recorded an impairmentinvestment tax credits having a larger effect because of $3.3 million on our investments in affordable housing partnerships after an analysis of the individual investment carrying values compared to their expected future tax benefits. lower annual pre-tax book income.
We also recorded an impairment of $1.6 million as a direct result of the Tax Act, which reduced the corporate tax rate to 21%. The impairment that resulted due to the tax reform, was recorded as an increase in tax provision expenses. Other investments in affordable housing partnership expenses are recorded based on the financial statements of the investment projects. We make investmentsinvest in affordable housing partnerships and receive Community Reinvestment Act creditCRA credits and tax credits which reduces ourthat reduce the overall effective tax provision rate. InvestmentsAmortization of investments in affordable housing partnership expenses that are not impairment related arepartnerships is recorded in noninterest expense based on benefit schedules of individual investment projects under the performanceequity method of accounting. The benefit schedules show tax deductions investors can take each year. We amortize the initial cost of the underlying investment. We receive updated financial information for ourinvestments in affordable housing partnerships investments and record losses based on the performance of the investment. These losses will eventually bepartnerships. This amortization expense is more than offset by both tax credits received, which reduce our tax provision expense. Investmentsexpense dollar for dollar, and the tax benefits related to any tax losses generated through the affordable housing project’s expenditures. Total tax credits related to our investment in affordable housing partnership investment was approximately $8.6 million for the year ended December 31, 2023, compared with $8.9 million for the year ended December 31, 2022. The balance of investments in affordable housing partnerships increased from $70.1$47.7 million at December 31, 20162022, to $81.0$54.5 million at December 31, 2017.
Credit related expenses decreased $2.4 million, or 80%, to $582 thousand for 2017 compared to $3.0 million for 2016. Credit related expenses declined in 2017 compared to 2016 largely due to a $2.8 million provision reversal for off balance sheet unfunded commitments recorded during the third quarter of 2017. Updated information related to off balance sheet unfunded commitments and utilization rates used in the calculation of the allowance for unfunded commitments resulted in a $2.8 million reduction in the required allowance for the third quarter of 2017. Reserves for off balance sheet unfunded commitments at December 31, 2017 totaled $836 thousand compared to $3.2 million at December 31, 2016.
Merger and integration expenses decreased $15.1 million, or 89%, to $1.8 million for 2017 compared to $16.9 million in 2016. The decline in merger and integration expenses was due to a decline in expenses related to the merger with Wilshire. The bulk of merger and integration expenses for 2016 were related to advisory and legal fees associated with preparing for the acquisition of Wilshire. With the merger completed in 2016, these expenses were greatly reduced in 2017. Merger and integration expense for 2017 mostly consisted of remaining expenses related to the merger with Wilshire but also included expenses for the now terminated merger with U & I Financial Corp.
Other expenses increased $2.0 million, or 13%, to $16.8 million in 2017 compared to $14.8 million in 2016. Amortization of core deposit intangible included in other expenses increased $1.0 million from $1.7 million in 2016 to $2.7 million in 2017. The increase in other expenses was mostly due to a full year of combined other expenses after the merger with Wilshire compared to only five month of combined expenses recorded for 2016.
Comparison of 2016 with 2015
The increase in noninterest expense for 2016 over 2015 was due mostly to increases in salaries and employee benefits, merger and integration expenses, and occupancy expenses. All noninterest expense line items were increased in 2016 compared to 2015 due to the acquisition of Wilshire in the third quarter of 2016.

2023.
38
43




Salaries and employee benefits totaled $107.9 million for 2016, an increase of $23.0 million, or 27% compared to $84.9 million for 2015. The increase was comprised mostly of a $14.1 million increase in employee salaries and an increase of $4.1 million in provision for bonuses. These increases primarily reflect increases in the number of full-time equivalent employees to 1,372 at December 31, 2016 from 938 as of December 31, 2015. The increase in full-time employees was directly a result of the acquisition of Wilshire in the third quarter of 2016.
Occupancy expense increased $5.2 million, or 27%, to $24.6 million for 2016 compared to $19.4 million in 2015. With the acquisition of Wilshire, we assumed 35 branches offices and six loan production offices. Although some of these locations were closed with our branch consolidation plan, the remaining lease locations contributed to the overall increase in occupancy expenses for 2016.
Merger and integration expenses increased $15.4 million to $16.9 million for 2016 compared to $1.5 million in 2015. Of the $16.9 million in merger and integration expenses for 2016, $16.8 million was related to the acquisition of Wilshire in July 2016. The bulk of these expenses were related to financial advisory and legal fees associated with preparing for the acquisition of Wilshire.
Other expenses increased $5.3 million, or 56%, to $14.8 million in 2016, compared to $9.5 million in 2015. The increase in other expenses was attributed to increases in amortization on our core deposit intangible assets and an increase in expenses related to our directors. All of these increases were in some way related to the acquisition of Wilshire.
A breakdown of noninterest expense by category is provided below:
 Year Ended December 31, 2017 Increase (Decrease) Year Ended December 31, 2016 Increase Year Ended December 31, 2015
(Dollars in thousands) Amount %  Amount % 
Salaries and employee benefits$144,669
 $36,725
 34 % $107,944
 $23,045
 27% $84,899
Occupancy28,587
 4,013
 16 % 24,574
 5,183
 27% 19,391
Furniture and equipment14,643
 2,917
 25 % 11,726
 2,481
 27% 9,245
Advertising and marketing10,281
 2,961
 40 % 7,320
 2,230
 44% 5,090
Data processing and communications12,179
 776
 7 % 11,403
 2,224
 24% 9,179
Professional fees14,954
 8,398
 128 % 6,556
 971
 17% 5,585
Investment in affordable housing partnerships expenses13,862
 9,762
 238 % 4,100
 2,658
 184% 1,442
FDIC assessments5,173
 1,008
 24 % 4,165
 77
 2% 4,088
Credit related expenses582
 (2,372) (80)% 2,954
 1,030
 54% 1,924
OREO expense, net3,100
 608
 24 % 2,492
 969
 64% 1,523
Merger and integration expense1,781
 (15,133) (89)% 16,914
 15,374
 998% 1,540
Other16,790
 1,963
 13 % 14,827
 5,349
 56% 9,478
Total noninterest expense$266,601
 $51,626
 24 % $214,975
 $61,591
 40% $153,384
Income Tax Provision
The provision for income taxes for 2017 was $124.4 million, compared to $77.5 million in 2016 and $63.1 million in 2015. The effective income tax rate was 47.15% for 2017 compared to 40.51% for 2016 and 40.61% for 2015. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act which among other changes, reduces the U.S. federal corporate tax rate from 35% to 21%. As a result of the Tax Act, we had to reassess our net deferred tax assets and investments in affordable housing partnerships at the lower tax rate. This resulted in additional tax provision expenses of $25.4 million which increased our overall tax rate for 2017. See Note 10 of Notes to Consolidated Financial Statements for more detailed information on income taxes.


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Financial Condition
Our total assets were $14.21$19.13 billion at December 31, 20172023, compared to $13.44with $19.16 billion at December 31, 2016, an increase2022, a slight decrease of $765.3$33.0 million, or 6%0.2% year over year.
Cash and Cash Equivalents
Cash and cash equivalents increased to $1.93 billion at December 31, 2023, up from $506.8 million at December 31, 2022. In March 2023, the banking industry experienced significant disruption with multiple high profile bank failures within a few days. As a result, there was an overall decline of consumer confidence in the banking industry and in response to these events we bolstered our on-balance sheet liquidity with drawdowns of our available borrowing capacity, primarily through the use of BTFP. This increased the balance of cash and cash equivalents on our balance sheet in 2023.
Investment Securities Portfolio
The main objectives of our investment strategy are to provide sources of liquidity while managing our interest rate risk and generating an adequate level of interest income. Our investment policy permits investments in various types of securities, certificates of deposits, and federal funds sold in compliance with various restrictions in the policy.
Our investment securities AFS totaled $2.15 billion at December 31, 2023, compared with $1.97 billion at December 31, 2022. At December 31, 2023, we had $263.9 million in investment securities HTM compared with $271.1 million at December 31, 2022. We have the ability and intent to hold investment securities classified as HTM to maturity. $465.7 million in investment securities were purchased and $333.9 million in investment securities were paid down in 2023. There were no sales of investment securities in 2023. At December 31, 2023, $1.70 billion in securities were pledged to the BTFP, to secure public deposits, or for other purposes required or permitted by law, of which $230.4 million in securities were pledged in the State of California time deposit program, and $133 thousand was pledged for other public deposits.
During the second quarter of 2022, we transferred $239.0 million in fair value of debt securities from AFS to HTM. The transferred securities had an amortized cost of $275.5 million with a pre-tax net unrealized loss of $36.6 million, which was recorded as a discount to be amortized as an adjustment to yield. The unrealized holding loss at the date of transfer is reported, net of taxes, in accumulated other comprehensive income (loss) (“AOCI”) as a component of stockholders’ equity and is being amortized over the remaining life of the securities as an adjustment to yield, offsetting the corresponding discount amortization’s impact on interest income.
Our investment portfolio consists of treasury bonds, government sponsored enterprise (“GSE”) bonds, mortgage backed securities (“MBS”), collateralized mortgage obligations (“CMOs”), asset-backed securities, corporate securities, and municipal securities.
Our investment securities portfolio is primarily invested in residential CMOs and residential and commercial MBS, which combined to represent 76% and 84% of our total investment securities portfolio at December 31, 2023 and 2022, respectively. At December 31, 2023 and 2022, all of our CMOs and MBS were issued by the Government National Mortgage Association (“GNMA”), Fannie Mae (“FNMA”), or Freddie Mac (“FHLMC”), which guarantee the contractual cash flows of these investments. All of our corporate, asset-backed, and municipal securities at December 31, 2023, were rated as investment grade.
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The following table presents the amortized cost, estimated fair value, and net unrealized gain and losses on our investment securities as of the dates indicated:
 December 31, 2023December 31, 2022
 Amortized
Cost		Estimated
Fair
Value		Net
Unrealized Gain (Loss)		Amortized
Cost		Estimated
Fair
Value		Net Unrealized
Gain (Loss)
 (Dollars in thousands)
Debt securities AFS:
U.S. Treasury securities$103,691 $103,677 $(14)$3,990 $3,886 $(104)
U.S. Government agency and U.S. Government sponsored enterprises:
Agency securities4,000 3,900 (100)4,000 3,867 (133)
CMOs888,631 747,719 (140,912)947,541 793,699 (153,842)
MBS:
Residential499,431 420,298 (79,133)544,084 453,177 (90,907)
Commercial445,207 391,888 (53,319)417,241 368,287 (48,954)
Asset-backed securities150,992 149,670 (1,322)153,539 147,604 (5,935)
Corporate securities23,302 19,434 (3,868)23,351 18,857 (4,494)
Municipal securities314,554 308,473 (6,081)195,675 182,752 (12,923)
Total investment securities AFS$2,429,808 $2,145,059 $(284,749)$2,289,421 $1,972,129 $(317,292)
Debt securities HTM:
U.S. Government agency and U.S. Government sponsored enterprises:
MBS:
Residential$150,369 $143,706 $(6,663)$157,881 $150,840 $(7,041)
Commercial113,543 106,812 (6,731)113,185 107,567 (5,618)
Total investment securities HTM$263,912 $250,518 $(13,394)$271,066 $258,407 $(12,659)
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The following table summarizes the maturity of securities based on carrying value and their related weighted average yield (non-tax equivalent) at December 31, 2023:
 Within One YearAfter One But
Within Five Years		After Five But
Within Ten Years		After Ten YearsTotal
 AmountYieldAmountYieldAmountYieldAmountYieldAmountYield
 (Dollars in thousands)
Debt securities AFS:
US Treasury securities$103,677 5.36 %$— — %$— — %$— — %$103,677 5.36 %
U.S. Government agency and U.S. Government sponsored enterprises:
Agency securities— — %3,900 4.08 %— — %— — %3,900 4.08 %
CMOs— — %540 1.85 %5,317 2.29 %741,862 2.04 %747,719 2.04 %
MBS:
Residential— — %1,187 2.19 %18,034 2.59 %401,077 1.84 %420,298 1.87 %
Commercial— — %131,933 3.04 %1,456 5.01 %258,499 2.80 %391,888 2.89 %
Asset-backed securities— — %2,451 7.63 %15,040 7.67 %132,179 7.52 %149,670 7.54 %
Corporate securities— — %— — %15,171 2.69 %4,263 6.64 %19,434 3.56 %
Municipal securities— — %9,915 1.57 %38,916 2.89 %259,642 4.32 %308,473 4.05 %
Total securities AFS$103,677 5.36 %$149,926 3.04 %$93,934 3.56 %$1,797,522 2.85 %$2,145,059 3.01 %
Debt securities HTM:
U.S. Government agency and U.S. Government sponsored enterprises:
MBS:
Residential$— — %$— — %$— — %$150,369 3.91 %$150,369 3.91 %
Commercial— — %25,586 4.14 %8,634 3.80 %79,323 3.88 %113,543 3.93 %
Total securities HTM$— — %$25,586 4.14 %$8,634 3.80 %$229,692 3.90 %$263,912 3.92 %
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The following table shows the Company’s AFS investments’ gross unrealized losses and estimated fair values, aggregated by investment category and the length of time that the individual securities have been in a continuous unrealized loss position at December 31, 2023. The length of time that the individual investment securities AFS have been in a continuous unrealized loss position is not a factor in determining credit impairment with the adoption of CECL.
December 31, 2023
Less than 12 months12 months or longerTotal
Description of
Securities AFS		Number 
of
Securities		Fair 
Value		Gross
Unrealized
Losses		Number 
of
Securities		Fair 
Value		Gross
Unrealized
Losses		Number 
of
Securities		Fair 
Value		Gross
Unrealized
Losses
  (Dollars in thousands)
U.S. Treasury securities— $— $— 1 $3,963 $(35)1 $3,963 $(35)
U.S. Government agency and U.S. Government sponsored enterprises:
Agency securities— — — 1 3,900 (100)1 3,900 (100)
CMOs3 19,800 (378)115 717,662 (140,901)118 737,462 (141,279)
MBS:
Residential— — — 65 420,298 (79,133)65 420,298 (79,133)
Commercial6 53,255 (2,129)53 331,450 (51,303)59 384,705 (53,432)
Asset-backed securities— — — 18 149,670 (1,322)18 149,670 (1,322)
Corporate securities— — — 6 19,434 (3,868)6 19,434 (3,868)
Municipal securities11 42,760 (263)42 91,707 (11,516)53 134,467 (11,779)
Total20 $115,815 $(2,770)301 $1,738,084 $(288,178)321 $1,853,899 $(290,948)
We performed an analysis on our investment securities portfolio at December 31, 2023 and 2022, and determined that an allowance for credit losses was not required for investment securities AFS or HTM. The majority of our investment portfolio consisted of securities issued by U.S. Government agencies or U.S. Government sponsored enterprises, which were determined to have a zero loss expectation. At December 31, 2023, we also had 18 asset-backed securities, six corporate securities, and 53 municipal bonds not issued by U.S. Government agencies or U.S. Government sponsored enterprises that were in unrealized loss positions. Based on our analysis of these investment securities, we concluded a credit loss did not exist due to the strength of the issuers, high bond ratings, and because we expect full payment of principal and interest.
Equity Investments
At December 31, 2023, equity investments totaled $43.8 million compared with $42.4 million at December 31, 2022. For the year ended December 31, 2023, we recorded an increase in equity investments due to reinvestments of $1.3 million and change in fair value of $60 thousand, partially offset by return of equity investments of $3 thousand. Equity investments at December 31, 2023 included $4.4 million in equity investments with readily determinable fair values and $39.4 million in equity investments without readily determinable fair values.
Equity investments with readily determinable fair values at December 31, 2023, consisted of mutual funds totaling $4.4 million. Changes to the fair value of equity investments with readily determinable fair values are recorded in other noninterest income. Equity investments without readily determinable fair values at December 31, 2023, included $38.0 million in CRA investments, $1.0 million in Community Development Financial Institutions investments, and $370 thousand in correspondent bank stock. Equity investments without readily determinable fair values are carried at cost, less impairment, and adjustments are made to the carrying balance based on observable price changes. There were no impairments or observable price changes for these investments during the year ended December 31, 2023.
Deferred Tax Assets, Net
At December 31, 2023, we had $135.2 million in net deferred tax assets compared with $150.4 million at December 31, 2022. The decrease in net deferred tax assets was primarily due to lower deferred taxes resulting from a decline in unrealized losses on our investments securities AFS during the year ended December 31, 2023.
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Investments in Affordable Housing Partnerships
At December 31, 2023, we had $54.5 million in investments in affordable housing partnerships compared with $47.7 million at December 31, 2022. The increase in assets for 2017 compared to 2016investments in affordable housing partnerships was principally due to new investments, partially offset by amortization recorded during the year ended December 31, 2023. Commitments to fund investments in affordable housing partnerships totaled $21.0 million at December 31, 2023, compared with $11.8 million at December 31, 2022. The increase in loans from higher loan originationscommitments to fund investments in 2017 as well as an increase in investment securitiesaffordable housing partnerships during the year ended December 31, 2023, was due to purchases throughoutnew commitments made, partially offset by our cash contributions, which reduced the year.prior commitment balances.
Loans Held For Sale
Loans held for sale at December 31, 2023, totaled $3.4 million compared with $49.2 million at December 31, 2022, representing a decrease of $45.8 million, or 93.1%. Loans held for sale at December 31, 2023, comprised $2.3 million in CRE loans held for sale, and $1.1 million in residential mortgage loans held for sale. At December 31, 2022, loans held for sale consisted of $48.8 million in CRE loans held for sale, and $450 thousand in residential mortgage loans held for sale. The decrease in loans held for sale was primarily due to more loans sold than were originated or transferred to loans held for sale.
Loan Portfolio
We offer variousa variety of products designed to meet the credit needs of our borrowers. Our lending activities primarily consist of commercial realCRE loans, C&I loans, residential mortgage, and consumer and other loans. Real estate loans commercial businessas a percentage to total loans trade finance, and consumer loans.were 64% at December 31, 2023, compared with 61% at December 31, 2022. Gross loans receivable rosedecreased by $559.2 million$1.55 billion to $11.10$13.85 billion at December 31, 20172023, from $10.54$15.40 billion at December 31, 2016.2022.
Our CRE and C&I loans decreased in 2023 compared with the previous year, reflecting our prudent approach to loan growth and the impact of payoffs and paydowns in a high interest rate environment. The remaining discount on acquireddecreases were partially offset by increases in residential mortgage and consumer loans over the same period.
Approximately 45% of our total loans were variable rate loans at December 31, 2017 totaled $85.5 million2023, compared to $110.4 millionwith 46% at December 31, 2016.
We experienced an increase in all loan types apart from residential real estate and commercial business loans in 2017 compared to the previous year.2022. The rates of interest charged on adjustablevariable rate loans are set at specified spreads based on the prime lending rate, SOFR rates and other indices, and vary as the prime lending rate varies. Approximately 43% of our total loans were adjustable rate loans at December 31, 2017 compared to 47% at December 31, 2016.indices reprice.
With certain exceptions, we are permitted under applicable law to make unsecured loans to single borrowers (including certain related persons and entities) in aggregate amounts of up to 15% of the sum of our total capital, and our allowance for loancredit losses (as defined for regulatory purposes) at the Bank level, and certain capital notes and debentures issued by us, if any. As ofus. At December 31, 2017,2023, our lending limit was approximately $245.1$352.6 million per borrower for unsecured loans. For lending limit purposes, a secured loan is defined as a loan secured by collateral having a current fair value of at least 100% of the amount of the loan or extension of credit at all times and satisfying certain other requirements. In addition to unsecured loans, we are permitted to make such collateral-secured loans in an additional amount up to 10% (for a total of 25%) of our total capital and the allowance for loancredit losses for a total limit of approximately $408.5$587.6 million to one borrower.borrower at December 31, 2023. The largest aggregate amount of loans that the Bank had outstanding to any one borrower and related entities was $127.8$143.8 million, of which werethe entire amount was performing and in good standing at December 31, 2017.2023. The exposure consisted of nine loans, predominantly used to finance commercial real estate properties, with a weighted average loan-to-value ratio of 62%.
The following table shows the composition of our loan portfolio by type of loan on the dates indicated:
 December 31,
20232022202120202019
 Amount%Amount%Amount%Amount%Amount%
(Dollars in thousands)
Loan portfolio composition:
CRE loans$8,797,884 64 %$9,414,580 61 %$9,105,931 65 %$8,772,134 65 %$8,664,551 71 %
C&I loans4,135,044 30 %5,109,532 33 %4,208,674 30 %4,157,787 31 %2,721,183 22 %
Residential mortgage loans883,687 6 %846,080 6 %579,626 5 %582,232 4 %835,188 7 %
Consumer and other loans37,004 — %33,348 — %58,512 — %51,060 — %55,085 — %
Total loans outstanding13,853,619 100 %15,403,540 100 %13,952,743 100 %13,563,213 100 %12,276,007 100 %
Less: allowance for credit losses(158,694)(162,359)(140,550)(206,741)(94,144)
Loans receivable, net$13,694,925 $15,241,181 $13,812,193 $13,356,472 $12,181,863 
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 December 31,

2017 2016 2015 2014 2013
 Amount % Amount % Amount % Amount % Amount %
 (Dollars in thousands)
Loan portfolio composition:                   
Real estate loans:                   
Residential$49,774
 0% $57,884
 1% $33,797
 0% $21,415
 0% $10,039
 0%
Commercial8,142,036
 73% 7,842,573
 75% 4,912,655
 78% 4,324,349
 78% 3,821,163
 75%
Construction316,412
 3% 254,113
 2% 123,030
 2% 94,086
 2% 72,856
 2%
Total real estate loans8,508,222
 76% 8,154,570
 78% 5,069,482
 80% 4,439,850
 80% 3,904,058
 77%
Commercial business1,780,869
 16% 1,832,021
 17% 980,153
 16% 903,621
 16% 949,093
 19%
Trade finance166,664
 2% 154,928
 1% 99,163
 2% 134,762
 2% 124,685
 2%
Consumer and other647,102
 6% 403,470
 4% 102,573
 2% 89,849
 2% 98,507
 2%
Total loans outstanding11,102,857
 100% 10,544,989
 100% 6,251,371
 100% 5,568,082
 100% 5,076,343
 100%
Less: deferred loan fees(282)   (1,657)   (3,030)   (2,890)   (2,168)  
Gross loans receivable11,102,575
   10,543,332
   6,248,341
   5,565,192
   5,074,175
  
Less: allowance for loan losses(84,541)   (79,343)   (76,408)   (67,758)   (67,320)  
Loans receivable, net$11,018,034
   $10,463,989
   $6,171,933
   $5,497,434
   $5,006,855
  
Commercial Real Estate Loans
Our real estateCRE loans consist primarily of loans secured by deeds of trust on commercial real estate, including SBA loans secured by commercial real estate. It is our general policy to restrict commercial real estate loan amounts to 75% of the appraised value of the property at the time of loan funding. We offer both fixed and floating interest rate loans. The maturities on such loans are generally up to seven years (with payments determined on the basis of principal amortization schedules of up to 25 years and a balloon payment due at maturity). Real estateCRE loans secured by non-consumer residential real estate comprise less than 1% of the total loan portfolio (consumer residential mortgage loans are classified separately as consumerand included in residential mortgage loans). Construction loans are also a small portion of the total real estate portfolio, totaling $196.3 million and comprising approximately 3%1% of total loans outstanding. Total real estateoutstanding as of December 31, 2023. CRE loans consisting primarily of commercial real estate loans, increased $353.7 million or, 4%, to $8.51totaled $8.80 billion at December 31, 20172023, a decrease of $616.7 million, or 7%, from $8.15$9.41 billion at December 31, 2016. The increase was mostly due to higher levels of loan originations for the year ended December 31, 2017 compared to the prior year.2022.

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Table of Contents


OtherCommercial and Industrial Loans
Commercial businessC&I loans include term loans to businesses, lines of credit, trade finance facilities, asset-based lending, and commercial SBA loans, equipment leasing loans, and warehouse lines of credit.loans. Business term loans are generally provided to finance business acquisitions, working capital, and/or equipment purchases. Lines of credit are generally provided to finance short-term working capital needs. Trade finance facilities are generally provided to finance import and export activities. SBA loans are provided to small businesses under the U.S. SBA guarantee program. Short-term credit facilities (payable within one year) typically provide for periodic interest payments, with principal payable at maturity. Term loans (usually 5 to 7 years) normally provide for monthly payments of both principal and interest. SBA commercial loans usually have a longer maturity (7 to 10 years). These credits are reviewed on a periodic basis, and most loans are secured by business assets and/or real estate. Warehouse lines of credit are used by mortgage originators to fund mortgages which are then pledged to the Bank as collateral until the mortgageC&I loans are sold and the lines of credit are paid down. The typical duration of these lines of credit from the time of funding to pay-down ranges from 10-30 days. Although collateralized by mortgage loans, the structure of warehouse lending agreements results in the commercial and industrial loan treatment for these types of loans. During 2017, commercial business loans decreased $51.2 million, or 3%, to $1.78totaled $4.14 billion at December 31, 20172023, a decrease of $974.5 million, or 19%, from $1.83$5.11 billion at December 31, 2016, primarily due to a decline in2022. In 2023, we completely exited our residential mortgage warehouse linesline of credit. credit business, which totaled $244.2 million as of December 31, 2022.
Residential Mortgage Loans
The residential mortgage portfolio totaled $883.7 million at December 31, 2023, an increase of $37.6 million, or 4%, from $846.1 million at December 31, 2022.
Consumer and Other Loans
Consumer loans comprise approximately 6%less than 1% of the total loan portfolio. Most of our consumer loan portfolio, consists of single-family mortgages, but also includeand includes automobile loans, home equity lines and loans, signature (unsecured)term loans and lines of credit, and loans, and credit card loans. Consumer loans increased $243.6 million, or 60%, to $647.1totaled $37.0 million at December 31, 20172023, an increase of $3.7 million, or 11%, from $403.5$33.3 million at December 31, 2016. The increase in consumer loans was due primarily to an increase in originations of single-family mortgages in 2017.2022.
Loan Commitments
We provide lines of credit to business customers usually on an annual renewal basis. We normally do not make loan commitments in material amounts for periods in excess of one year.
The following table shows our loan commitments and letters of credit outstanding at the dates indicated:
  
December 31,
20232022202120202019
(Dollars in thousands)
Unfunded commitments to extend credit$2,274,239 $2,856,263 $2,329,421 $2,137,178 $1,864,947 
Standby letters of credit132,132 132,538 126,137 108,834 113,720 
Other commercial letters of credit51,983 22,376 56,333 40,508 37,627 
Total$2,458,354 $3,011,177 $2,511,891 $2,286,520 $2,016,294 
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December 31,

2017 2016 2015 2014 2013
 (Dollars in thousands)
Commitments to extend credit$1,526,981
 $1,592,221
 $802,251
 $586,714
 $668,306
Standby letters of credit74,748
 63,753
 45,083
 41,987
 44,190
Other commercial letters of credit74,147
 52,125
 36,256
 37,439
 56,380
Total$1,675,876
 $1,708,099
 $883,590
 $666,140
 $768,876


Nonperforming Assets
Nonperforming assets consist of nonaccrual loans, accruing loans that are 90 days or more past due, accruing restructured loans, and OREO.
Loans are placed on nonaccrual status when they become 90 days or more past due, unless the loan is both well-secured and in the process of collection. Loans may be placed on nonaccrual status earlier if the full and timely collection of principal or interest becomes uncertain. When a loan is placed on nonaccrual status, unpaid accrued interest is charged against interest income. Loans are charged off when collection of the loan is determined to be unlikely. Loans are restructured when, for economic or legal reasons related to the borrower’s financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider. OREO consists of real estate acquired by the Bank through foreclosure or similar means, including by deed from the owner in lieu of foreclosure, and is held for future sale.

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Nonperforming assets were $125.2$45.5 million at December 31, 2017 compared to $111.2 million at December 31, 2016. Nonperforming assets at December 31, 2017 increased from nonperforming assets2023, compared with $69.4 million at December 31, 2016 due2022. The decrease in nonperforming assets was attributable to the increasea decline in nonaccrual loans which was partially offset by a decline in OREO.and accruing TDR loans. The following table illustrates the composition of nonperforming assets and nonperforming loans by legacy loans (loans originated by us) and acquired loans as ofat the dates indicated:
 December 31,
20232022202120202019
(Dollars in thousands)
Nonaccrual loans (1)(2)
$45,204 $49,687 $54,616 $85,238 $54,785 
Accruing delinquent loans past due 90 days or more (2)
261 401 2,131 614 7,547 
Accruing troubled debt restructured loans (3)
— 16,931 52,418 37,354 35,709 
Total nonperforming loans45,465 67,019 109,165 123,206 98,041 
OREO63 2,418 2,597 20,121 24,091 
Total nonperforming assets$45,528 $69,437 $111,762 $143,327 $122,132 
 December 31,
 2017 2016 2015 2014 2013
 (Dollars in thousands)
Nonaccrual loans$46,775
 $40,074
 $40,801
 $46,353
 $39,154
Loans past due 90 days or more and still accruing407
 305
 375
 361
 5
Accruing restructured loans67,250
 48,874
 47,984
 57,128
 33,904
Total nonperforming loans114,432
 89,253
 89,160
 103,842
 73,063
Other real estate owned10,787
 21,990
 21,035
 21,938
 24,288
Total nonperforming assets$125,219
 $111,243
 $110,195
 $125,780
 $97,351
          
Nonaccrual loans:         
Legacy Portfolio$28,235
 $28,944
 $28,469
 $28,815
 $18,440
Acquired Portfolio18,540
 11,130
 12,332
 17,538
 20,714
Total nonaccrual loans$46,775
 $40,074
 $40,801
 $46,353
 $39,154
          
Nonperforming loans:         
Legacy Portfolio$77,305
 $74,890
 $73,422
 $83,609
 $50,536
Acquired Portfolio37,127
 14,363
 15,738
 20,233
 22,527
Total nonperforming loans$114,432
 $89,253
 $89,160
 $103,842
 $73,063
_________________________
Subsequent(1) Nonaccrual loans exclude the guaranteed portion of delinquent SBA loans that are in liquidation.
(2) Excludes PCI loans for periods prior to December 31, 2017, we downgraded one lending relationship with two commercial business2020.
(3) The Company adopted ASU 2022-02 on January 1, 2023, which eliminated the concept of TDR loans with tiesfrom GAAP. Prior to the entertainment industry to nonaccrual status because additional information came to light that could potentially affect the collectibility of theseJanuary 1, 2023, nonperforming loans included accruing TDR loans. Although these two loans totaling $13.5 million were performing and well secured as of December 31, 2017, as of this Report date, it is probable that we will not be able to fully collect all of the principal and interest on these loans in accordance with the contractual terms.

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Maturity of Loans
The following table illustrates the maturity distribution intervals of loans outstanding as of at December 31, 2017.2023.
 December 31, 2023
 Loans Maturing
One Year or LessAfter One to
Five Years		After Five to Fifteen YearsAfter Fifteen YearsTotal Loans
Outstanding
(Dollars in thousands)
CRE loans$904,151 $4,901,351 $2,463,869 $528,513 $8,797,884 
C&I loans961,959 2,642,726 530,279 80 4,135,044 
Residential mortgage loans— 134 9,076 874,477 883,687 
Consumer and other loans24,146 12,472 379 7 37,004 
Total loans outstanding$1,890,256 $7,556,683 $3,003,603 $1,403,077 $13,853,619 
Fixed interest rate (1)
$501,779 $3,956,032 $1,974,317 $1,141,814 $7,573,942 
Variable interest rate1,388,477 3,600,651 1,029,286 261,263 6,279,677 
Total loans outstanding$1,890,256 $7,556,683 $3,003,603 $1,403,077 $13,853,619 
_________________________
(1) Includes hybrid loans (loans with fixed interest rates for a specified period and then convert to variable interest rates) in fixed interest rate periods at December 31, 2023.
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 December 31, 2017
 Loans Maturing  
 
Within One
Year
 
After One to
Five Years
 
After Five
Years
 
Total Loans
Outstanding
 (Dollars in thousands)
Real estate loans:       
Residential$8,030
 $31,888
 $9,856
 $49,774
Commercial744,389
 4,079,659
 3,317,988
 8,142,036
Construction253,272
 59,773
 3,367
 316,412
Total real estate loans1,005,691
 4,171,320
 3,331,211
 8,508,222
Commercial business loans822,939
 560,072
 397,858
 1,780,869
Trade finance loans165,734
 930
 —
 166,664
Consumer loans34,507
 25,726
 586,869
 647,102
Total loans outstanding$2,028,871
 $4,758,048
 $4,315,938
 $11,102,857
        
Fixed$540,169
 $3,299,120
 $2,440,850
 $6,280,139
Variable1,488,702
 1,458,928
 1,875,088
 4,822,718
Total loans outstanding$2,028,871
 $4,758,048
 $4,315,938
 $11,102,857
The following table presents the loans outstanding due after one year at December 31, 2023.
 December 31, 2023
Fixed Interest Rate (1)
Variable Interest RateTotal Loans Due After One Year
(Dollars in thousands)
CRE loans$5,993,467 $1,900,266 $7,893,733 
C&I loans234,109 2,938,976 3,173,085 
Residential mortgage loans843,590 40,097 883,687 
Consumer and other loans997 11,861 12,858 
Total loans outstanding$7,072,163 $4,891,200 $11,963,363 
_________________________
(1) Includes hybrid loans (loans with fixed interest rates for a specified period and then convert to variable interest rates) in fixed interest rate periods at December 31, 2023.
At December 31, 2023, we had $49.3 million in loan accrued interest receivable compared with $47.3 million at December 31, 2022.
Concentrations
Our lending activities are predominately in California, New Jerseypredominantly reflect our branch and the New York City, Houston, Dallas, Chicago, and Seattle metropolitan areas.office footprint. At December 31, 2017,2023, loans from California represented 67.9%54% of the total loans outstanding, and loans from New York and New Jersey represented 14.5%18%. The remaining 17.6%28% of total loans outstanding represented loans from other states. Although we have a diversified loan portfolio, a substantial portion of the loan portfolio and credit performance depends on the economic stability of Southern California. Within the California market, most of our business activity is with customers located within Los Angeles County (58.7%in Southern California (47%). Therefore, our exposure to credit risk is significantly affected by changes in the economy in the Los Angeles CountySouthern California area. Within our commercial real estateCRE loan portfolio, the largest property concentrations are multi-tenant retail buildings (19%), multifamily (14%), industrial & warehouse (14%), and gas station & car wash (12%). Within our C&I loan portfolio, the largest industry concentrations are hotel/motel (19.2%finance and insurance (20%), retail building (21.0%information technology (15%), gas station & car wash (11.3%manufacturing (14%), and industrial & warehouse (10.1%). Within our commercial and industrial loan portfolio, the largest industry concentrations are wholesalers (22.7%), retail trade (18.1%), manufacturing (14.7%), and services (10.1%(13%).
Allowance for LoanCredit Losses
The Bank has implemented a multi-faceted process to identify, manage, and mitigate the credit risks that are inherent in the loan portfolio. For new loans, each loan application package is fully analyzed by experienced reviewers and approvers. In accordance with current lending approval authority guidelines, a majority of loans are approved by the Management Loan Committee (“MLC”) and Directors Loan Committee (“DLC”). For existing loans, the Bank maintains a systematic loan review program, which includes internally conducted reviews and periodic reviews by external loan review consultants. Based on these reviews, loans are graded as to their overall credit quality, which is measured based on: the sufficiency of creditpayment capacity and collateral documentation; proper lien perfection; proper approval by loan committee(s); adherence to any loan agreement covenants; compliance with internal policies and procedures, and with laws and regulations; adequacy and strength of repayment sources including borrower or collateral generated cash flow; payment performance; and liquidation value of the collateral. We closely monitor loans that management has determined require further supervision because of the loan size, loan structure, and/or specific circumstances of the borrower.
When principal or interest on a loan is 90 days or more past due, a loan is generally placed on nonaccrual status unless it is considered to be both well-secured and in the process of collection. Further, a loan is considered a loss in whole or in part when (1) it appears that loss exposure on the loan exceeds the collateral value for the loan, (2) servicing of the unsecured portion has been discontinued, or (3) collection is not anticipated due to the borrower’s financial condition and general economic conditions in the borrower’s industry. Any loan or portion of a loan judged by management to be uncollectible is charged against the allowance for loancredit losses, while any recoveries are credited to suchthe allowance.
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Allowance for Credit Losses
The allowance for loancredit losses (“ACL”) was $84.5$158.7 million at December 31, 2017,2023, compared to $79.3with allowance for credit losses of $162.4 million at December 31, 2016. 2022. The year-over-year decline in ACL was primarily due to a year-over-year decrease in loan balances at December 31, 2023 compared to December 31, 2022. The ACL was 1.15% of loans receivable at December 31, 2023, and 1.05% of loans receivable at December 31, 2022. ACL on individually evaluated loans decreased from $3.9 million at December 31, 2022, to $2.7 million at December 31, 2023. In addition to allowance for credit losses, we had $3.8 million in allowances for unfunded loan commitments at December 31, 2023, compared with $1.4 million at December 31, 2022.
We recorded provisionsa provision for loancredit losses of $17.4$29.1 million in 20172023 compared to $9.0with a provision for credit losses of $9.6 million in 2016,2022, and $8.0a negative provision for credit losses of $12.2 million in 2015.

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2021. During 2017,2023, we charged off $17.4$37.5 million in loans outstanding and recovered $5.2 million in loans previously charged off. Total Criticized Loans, oroff compared with $12.4 million in charge offs and $24.6 million in recoveries for 2022. The increase in net charge offs for 2023 was largely due to an idiosyncratic full charge off of $23.4 million related to a borrower that entered into Chapter 7 liquidation in August 2023. In comparison, in 2022, we recorded $17.3 million in recoveries from a previously charged off loan, rated special mention, substandard, doubtful, or loss, at December 31, 2017 were $568.5 millionwhich contributed to a net recovery position for 2022 compared to $556.7 million at December 31, 2016. The allowancewith total net charge offs for loan losses was 0.76% of gross loans at December 31, 2017 compared to 0.75% at December 31, 2016. In addition to allowance for loan losses, we had $836 thousand in allowances for unused loan commitments as of December 31, 2017, compared to $3.2 million as of December 31, 2016.
For loans not classified as impaired loans, general loan loss allowances are provided to cover probable and incurred losses. The allowance is determined based first on a quantitative analysis using a loss migration methodology. The loans are classified by type and loan grade and the historical loss migration is tracked for the various stratifications. We further segregate these stratifications between loans accounted for under the amortized cost method (referred to as “Legacy Loans”) and loans acquired (referred to as “Acquired Loans”), as acquired loans were originally recorded at fair value with no carryover of the related allowance for loan losses. See “Financial Condition—Allowance for Loan Losses Methodology” for a detailed description of our loan loss methodology.
Impaired loans as defined by ASC 310-10-35, totaled $114.3 million and $140.4 million, respectively, as of December 31, 2017 and December 31, 2016, with specific allowances of $5.3 million and $7.4 million, respectively. The MLC, DLC, and the Management ALLL Committee of the Bank all review the adequacy of the allowance for loan losses on at least a quarterly basis and more frequently as needed. Based upon these evaluations and internal and external reviews of the overall quality of our loan portfolio, we believe that the allowance for loan losses was adequate to absorb estimated probable incurred losses inherent in the loan portfolio as of December 31, 2017. However, no assurances can be given that the Bank will not experience further losses in excess of the allowance, which may require additional future provisions for loan losses.2023.
The following table presents total nonaccrual and delinquent loans (loans past due 30 to 8930+ days) as ofat the dates indicated:
 December 31,
 2017 2016 2015 2014 2013
 (Dollars in thousands)
Real estate—Residential$—
 $679
 $—
 $—
 $—
Real estate—Commercial33,838
 37,649
 28,085
 34,051
 35,492
Real estate—Construction1,300
 2,813
 1,369
 1,521
 —
Commercial business25,546
 13,076
 15,893
 12,875
 11,366
Trade finance—
 2,556
 1,731
 3,194
 1,031
Consumer and other10,451
 1,643
 2,087
 1,211
 1,364
Total Nonaccrual and Delinquent Loans$71,135
 $58,416
 $49,165
 $52,852
 $49,253
Nonaccrual loans included above$46,775
 $40,074
 $40,801
 $46,353
 $39,154
December 31,
20232022202120202019
 (Dollars in thousands)
CRE loans$36,092 $38,030 $60,203 $83,617 $54,475 
C&I loans6,640 9,146 15,576 17,304 12,681 
Residential mortgage loans6,173 11,101 20,188 11,690 13,220 
Consumer and other loans682 1,103 848 1,414 1,100 
Total nonaccrual and delinquent loans$49,587 $59,380 $96,815 $114,025 $81,476 
Nonaccrual loans included above$45,204 $49,687 $54,616 $85,238 $54,785 
We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt including but not limited to:to current financial information, historical payment experience, credit documentation, public information, and current economic trends. We analyze loans individually by classifying the loans as to credit risk. This analysis includes all non-homogeneous loans. Homogeneous loans are not risk rated and credit risk is analyzed largely by the number of days past due.
This analysis is performed on at least a quarterly basis. We use the following definitions for risk ratings:
•Pass: Loans that meet a preponderance or more of our underwriting criteria and evidence an acceptable level of risk.
•Special Mention: Loans classified as Special Mentionthat have a potential weaknessweaknesses that deservesdeserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.
•Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligorborrower or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
•Doubtful/Loss: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

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Total criticized loans, or loans rated special mention, substandard, doubtful, or loss at December 31, 2023, totaled $322.4 million compared with $261.3 million at December 31, 2022. Loans assigned a risk rating of Special Mention, Substandard, Doubtful, or worseLoss are referred to as Criticized Loans and loans assigned a risk rating of Substandard, Doubtful, or worseLoss are separately referred to as Classified Loans. The following table provides the detail of Criticized Loans by risk rating as ofat the dates indicated:
December 31,
20232022202120202019
(Dollars in thousands)
Special Mention$178,992 $157,263 $257,194 $184,941 $141,452 
Substandard143,449 104,073 242,397 366,556 259,278 
Doubtful/Loss— — — 1 13 
Total Criticized Loans$322,441 $261,336 $499,591 $551,498 $400,743 
In 2023, we sold $172.1 million in loans with elevated credit risk comprising $147.5 million in substandard loans and $24.6 million in special mention loans. In 2022, we sold $77.0 million in loans with elevated credit risk comprising $76.6 million in substandard loans and $400 thousand in special mention loans. In 2021, we sold $251.0 million in loans with elevated credit risk comprising $182.6 million in substandard loans and $68.4 million in special mention loans.

53

 December 31,
 2017 2016 2015 2014 2013
 (Dollars in thousands)
Special Mention$214,891
 $243,656
 $104,186
 $122,335
 $89,489
Substandard353,222
 311,106
 201,362
 221,875
 258,500
Doubtful362
 1,949
 2,214
 2,187
 7,861
Loss—
 —
 —
 —
 —
Total Criticized Loans$568,475
 $556,711
 $307,762
 $346,397
 $355,850

The following table shows the provision for loancredit losses, the amount of loans charged off, theand recoveries on loans previously charged off together with the balance in the allowance for loancredit losses at the beginning and end of each year, the amount of average and total loans outstanding andas well as other pertinent ratios as ofat the dates and for the years indicated:
 At or For The Year Ended December 31,
 2017 2016 2015 2014 2013
 (Dollars in thousands)
LOANS:         
Average loans receivable, including loans held for sale (net of deferred fees)$10,642,349
 $8,121,897
 $5,846,658
 $5,355,243
 $4,692,089
Total loans receivables, excluding loans held for sale (net of deferred fees)11,102,575
 10,543,332
 6,248,341
 5,565,192
 5,074,175
ALLOWANCE:         
Balance—beginning of year79,343
 76,408
 67,758
 67,320
 66,941
Loans charged off:         
Commercial real estate3,142
 910
 741
 2,726
 8,529
Commercial business and trade finance13,300
 7,293
 3,530
 14,933
 12,973
Consumer and other loans968
 757
 641
 100
 567
Total loans charged off17,410
 8,960
 4,912
 17,759
 22,069
Less recoveries:         
Commercial real estate212
 1,187
 1,947
 963
 311
Commercial business and trade finance4,996
 1,614
 3,011
 4,366
 1,937
Consumer and other loans40
 94
 604
 230
 200
Total loan recoveries5,248
 2,895
 5,562
 5,559
 2,448
Net loans charged off (recovered)12,162
 6,065
 (650) 12,200
 19,621
Provision for loan losses17,360
 9,000
 8,000
 12,638
 20,000
Balance—end of year$84,541
 $79,343
 $76,408
 $67,758
 $67,320
          
RATIOS:         
Net loan charge-offs (recoveries) to average loans0.11% 0.07% (0.01)% 0.23% 0.42%
Allowance for loan losses to gross loans0.76% 0.75% 1.22 % 1.22% 1.33%
Net loan charge-offs (recoveries) to allowance for loan losses14.39% 7.64% (0.85)% 18.01% 29.15%
Net loan charge-offs (recoveries) to provision for loan losses70.06% 67.39% (8.13)% 96.53% 98.11%
Allowance for loan losses to nonperforming loans73.88% 88.90% 85.70 % 65.25% 92.14%
          
At or For The Year Ended December 31,
20232022202120202019
(Dollars in thousands)
LOANS:
Average loans:
CRE loans$9,172,818 $9,371,641 $8,877,324 $8,693,105 $8,631,923 
C&I loans4,636,083 4,468,498 3,871,726 3,226,423 2,413,066 
Residential mortgage loans889,488 752,020 552,999 729,432 902,287 
Consumer and other loans33,777 42,468 41,382 49,563 51,399 
Average loans, including loans held for sale$14,732,166 $14,634,627 $13,343,431 $12,698,523 $11,998,675 
Total loans, excluding loans held for sale$13,853,619 $15,403,540 $13,952,743 $13,563,213 $12,276,007 
ALLOWANCE:
Balance - beginning of year162,359 140,550 206,741 94,144 92,557 
Loans charged off:
CRE loans(2,947)(6,803)(57,427)(8,658)(1,803)
C&I loans(34,203)(5,160)(3,558)(6,157)(5,086)
Residential mortgage loans— (22)(923)— — 
Consumer and other loans(370)(404)(328)(1,211)(1,220)
Total loans charged off(37,520)(12,389)(62,236)(16,026)(8,109)
Less recoveries:
CRE loans3,285 21,698 5,722 1,851 2,104 
C&I loans1,815 2,861 2,196 5,526 1,596 
Residential mortgage loans— — — — — 
Consumer and other loans62 39 327 46 36 
Total loan recoveries5,162 24,598 8,245 7,423 3,736 
Net loan (charge offs) recoveries(32,358)12,209 (53,991)(8,603)(4,373)
Adoption of CECL— — — 26,200 — 
Adoption of ASU 2022-02(407)— — — — 
Provision (credit) for credit losses29,100 9,600 (12,200)95,000 7,300 
PCI allowance adjustment— — — — (1,340)
Balance - end of year$158,694 $162,359 $140,550 $206,741 $94,144 
RATIOS:
Net loan charge offs (recoveries) to average loans0.22 %(0.08)%0.40 %0.07 %0.04 %
Allowance for credit losses to total loans receivable1.15 %1.05 %1.01 %1.52 %0.77 %
Net loan charge offs (recoveries) to allowance for credit losses20.39 %(7.52)%38.41 %4.16 %4.65 %
Allowance for credit losses to nonperforming loans349.05 %242.26 %128.75 %167.80 %96.03 %
ALLOWANCE FOR UNFUNDED COMMITMENTS:
Allowance for unfunded commitments$3,843 $1,351 $1,101 $1,296 $636 
Provision (credit) for unfunded commitments2,492 250 (195)660 (100)
54


45



The following table presents net loan charge offs (recoveries) to average loans by loan category for the years indicated:
Allowance for Loan Losses Methodology
We maintain an allowance for loan losses to provide for estimated probable losses that are inherent in our loan portfolio. The allowance is based on our regular quarterly assessments. Our methodologies for measuring the appropriate level of the allowance include the combination of: (1) a quantitative historical loss migration analysis (“Migration Analysis”) for pools of loans and a qualitative analysis of subjective factors and (2) a specific allowance method for impaired loans.
Year Ended December 31,
20232022202120202019
(Dollars in thousands)
Loan Type
CRE loans— %(0.16)%0.58 %0.08 %— %
C&I loans0.70 %0.05 %0.04 %0.02 %0.14 %
Residential mortgage loans— %— %0.17 %— %— %
Consumer and other loans0.91 %0.86 %— %2.35 %2.30 %
Net loan charge offs (recoveries) to average loans0.22 %(0.08)%0.40 %0.07 %0.04 %
The following table reflects our allocation of the allowance for loancredit losses by loan category and the ratio of each loan category to total loans as ofat the dates indicated:
December 31,
 20232022202120202019
 Amount of allowance for credit lossesACL Coverage RatioAmount of allowance for credit lossesACL Coverage RatioAmount of allowance for credit lossesACL Coverage RatioAmount of allowance for loan lossesACL Coverage RatioAmount of allowance for loan lossesALLL Coverage Ratio
 (Dollars in thousands)
Loan Type
CRE loans$93,940 1.07 %$95,884 1.02 %$108,440 1.19 %$162,196 1.85 %$53,593 0.62 %
C&I loans51,291 1.24 %56,872 1.11 %27,811 0.66 %39,155 0.94 %33,032 1.21 %
Residential mortgage loans12,838 1.45 %8,920 1.05 %3,316 0.57 %4,227 0.73 %5,925 0.71 %
Consumer and other loans625 1.69 %683 2.05 %983 1.68 %1,163 2.28 %1,594 2.89 %
Total$158,694 1.15 %$162,359 1.05 %$140,550 1.01 %$206,741 1.52 %$94,144 0.77 %
 December 31,
 2017 2016 2015 2014 2013
 Amount of allowance for loan losses Percent of loans to total loans Amount of allowance for loan losses Percent of loans to total loans Amount of allowance for loan losses Percent of loans to total loans Amount of allowance for loan losses Percent of loans to total loans Amount of allowance for loan losses Percent of loans to total loans
 (Dollars in thousands)
Loan Type                   
Real estate—residential
$88
 —% $209
 1% $230
 —% $146
 —% $25
 —%
Real estate—commercial
57,664
 73% 49,917
 75% 54,505
 78% 46,535
 78% 45,897
 75%
Real estate—construction
930
 3% 1,621
 2% 917
 2% 667
 2% 628
 2%
Commercial business20,755
 16% 23,547
 17% 16,547
 16% 16,471
 16% 17,592
 19%
Trade finance1,716
 2% 1,897
 1% 3,592
 2% 3,456
 2% 2,653
 2%
Consumer and other3,388
 6% 2,152
 4% 617
 2% 483
 2% 525
 2%
Total$84,541
 100% $79,343
 100% $76,408
 100% $67,758
 100% $67,320
 100%

The adequacy of the allowance for loancredit losses is determined by management based upon an evaluation and review of the credit quality of the loan portfolio, taking into consideration ofeconomic forecasts, historical loan loss migration experience, relevant internal and external factors that affect the collection of a loan, and other pertinent factors.
The Migration Analysis We use a combination of a modeled and non-modeled approach that incorporates current and future economic conditions to estimate lifetime expected losses on a collective basis. We incorporate in our modeled approach, Probability of Default (“PD”), Loss Given Default (“LGD”), and Exposure at Default (“EAD”) methodologies. For non-modeled loans, the allowance for credit losses is a formula methodologylargely based on the Bank’s actual historical net charge off experience for each loan poolloss experience. Both approaches are combined with other quantitative factors and loan risk grade (Pass, Special Mention, Substandard and Doubtful). The migration analysis is centered on the Bank’s internal credit risk rating system. Our internal and external credit reviews are used to determine and validate loan risk grades. This credit review system takes into consideration factors such as: borrower’s background and experience; historical and current financial condition; credit history and payment performance; economic conditions and their impact on various industries; type, fair value, and volatilityqualitative considerations in calculation of the value of collateral; lien position; and the financial strength of any guarantors.allowance for credit losses for collectively assessed loans with similar risk characteristics.
A general loan loss allowance is providedFor loans that do not share similar risk characteristics such as nonaccrual loans above $1.0 million, we evaluate these loans on loans not specifically identified as impaired (“non-impaired loans”). For non- impaired loans, including loans acquired without credit deterioration, the allowance is determined first based on a quantitative analysis using a loss migration methodology. The loans are classified by type and loan grade and the historical loss migration is tracked for the various stratifications. Loss experience is quantified for a specified period determined by management and then weighted to give more weight to the most recent periods. That loss experience is then applied to the stratified portfolio at the end of each quarter. As of December 31, 2017, we utilized nineteen non-homogeneous loan poolsan individual basis in the quantitative analysis process. The non-impaired commercial real estate loan portfolio was stratified into fourteen different loan pools based on property types and the non-impaired commercial and industrial loan portfolio was stratified into five different loan pools based on loan type in order to allocate historic loss experience to more granular loan pools.
Additionally, in order to systematically quantify the credit risk impact of other trends and changes within the loan portfolio, the Bank utilizes qualitative adjustments to the Migration Analysis within established parameters. The parameters for making adjustments are established under a Credit Risk Matrix that provides seven possible scenarios for each of the factors below. The matrix allows for up to three positive (major, moderate and minor), three negative (major, moderate and minor), and one neutral credit risk scenarios within each factor for each loan type pool. Generally, the factorsaccordance with ASC 326. These nonaccrual loans are considered to have no significant impact (neutral) to our historical migration ratios. However, if information exists to warrant adjustment to the Migration Analysis, changesdifferent risk profiles than performing loans and therefore are made in accordanceevaluated separately. We collectively assess nonaccrual loans with balances below $1.0 million along with the established parameters supported by narrative and/or statistical analysis. The Credit Risk Matrixperforming and accrual loans in order to reduce the nine possible scenarios enable the Bank to qualitatively adjust the Loss Migration Ratio or individual specific reserve allocations by as much as 50 basis points in either direction (positive or negative) for each loan type pool. This matrix considers the following nine factors, which are patterned after the guidelines provided under the Federal Financial Institutions Examination Council (“FFIEC”) Interagency Policy Statement on the Allowance for Loan and Lease Losses:
Changes in lending policies and procedures, including underwriting standards and collection, charge-off and recovery practices.

46

Changes in national and local economic and business conditions and developments, including the condition of various market segments.
Changes in the nature and volume of the loan portfolio.
Changes in the experience, ability and depth of lending management and staff.
Changes in the trends of the volume and severity of past due and classified loans and changes in trends in the volume ofindividually assessing small nonaccrual loans troubled debt restructurings and other loan modifications.
Changes inwith immaterial balances. For individually assessed loans, the quality of our loan review system and the degree of oversight by the Directors.
Changes in the value of underlying collateral for collateral dependent loans.
The existence and effect of any concentrations of credit, and changes in the level of such concentrations.
The effect of external factors such as competition and legal and regulatory requirements on the level of estimated losses in our loan portfolio.
We also establish specific loss allowances for loans where we have identified potential credit risk conditions or circumstances related to a specific individual credit. The specific allowance amounts are determined by a method prescribed by ASC 310-10-35-22, Measurement of Impairment. The loans identified as impaired are accounted for in accordance with one of the three acceptable valuation methods: 1)ACL is measured using either (1) the present value of future cash flows discounted at the loan’s effective interest rate; 2)(2) the loan’s observable market price; or 3)(3) the fair value of the collateral, if the loan is collateral dependent. For the collateral dependent impaired loans, we obtain an appraisalnew appraisals to determine the amountfair value of impairment as of the date that the loan became impaired.collateral. The appraisals are based on an “as is”“as-is” valuation. To ensure that appraised values remain current, we generallyeither obtain either an internally prepared evaluation report or an updated appraisalappraisals every twelve months from a qualified independent appraiser.appraiser or an internal evaluation of the collateral is performed by qualified personnel. If the third party market data indicates that the value of the collateral property has declined since the most recent valuation date, management adjusts the value of the property downward to reflect current market conditions. If the fair value of the collateral less cost to sell, is less than the recorded amountamortized balance of the loan, we then recognize impairment by creating or adjusting an existing valuation allowanceACL with a corresponding charge to the provision for loan losses. If an impaired loan is expected to be collected through liquidation of the collateral, the loan is deemed to be collateral dependent and the amount of impairment is charged off against the allowance for loan losses.
We consider a loan to be impaired when it is probable that not all amounts due (principal and interest) will be collectible in accordance with the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The significance of payment delays and payment shortfalls is determined on a case-by-case basis by taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed.
For commercial business loans, real estate loans and certain consumer loans, we base the measurement of loan impairment on the present value of the expected future cash flows, discounted at the loan’s effective interest rate or on the fair value of the loan’s collateral if the loan is collateral dependent. We evaluate most consumer loans for impairment on a collective basis, because these loans have generally smaller balances and are homogeneous in the underwriting terms and conditions, and in the type of collateral. If a loan is deemed to be impaired, the amount of the impairment is supported by a specific allowance amount which is included in the allowance for loan losses through a charge to the provision for loancredit losses.
The scope for evaluation of individual impairment includes all loans risk graded Doubtful or Loss, all troubled debt restructured loans (“TDRs”) and all loans risk graded Substandard that are greater than $500 thousand regardless of performance under their contractual terms. ImpairedIndividually evaluated loans at December 31, 20172023, were $114.3$45.2 million,, a net decrease of $26.1$20.9 million from $140.4$66.1 million at December 31, 2016. This2022. The net decrease in impairedindividually evaluated loans iswas due primarily to payoffscharge offs and charge-offsthe sale of impairedproblem loans in 2017.2023.
Investment Security Portfolio
55
The main objectives of our investment strategy are to provide a source of liquidity while managing our interest rate risk and to generate an adequate level of interest income without taking undue risks. Our investment policy permits investments in various types of securities, certificates of deposits and federal funds sold in compliance with various restrictions in the policy. All of our investment securities are classified as available-for-sale. The securities for which we have the ability and intent to hold to maturity may be classified as held-to-maturity securities. However, we do not currently

We maintain a held-for-maturity or trading portfolio.
Our available-for-sale securities totaled $1.72 billionseparate ACL for our off-balance sheet unfunded loan commitments. We utilize a funding rate to allocate the allowance to undrawn exposures. This funding rate is used as a credit conversion factor to capture how much undrawn can potentially become drawn at December 31, 2017, compared to $1.56 billion at December 31, 2016. We had no securities that were categorized as held-to-maturity at December 31, 2017 or 2016. We had securities matured, called, or paid down totaling $264.7 million and purchased $572.5 million in securities during the year. In 2017, we sold securities totaling $128.8 million and had a net gain on sale of securities of $301 thousand. At December 31, 2017, we had a carrying balance of $359.2 million in securities that were pledged to secure public deposits, or for other purposes required or permitted by law. $337.7 million in securities were pledged in the State of California time deposit program, $8.0 million was pledged at the United State Department of Justice, and $13.5 million were pledged for public deposits.

47

Our investment portfolio consists of government sponsored enterprise (“GSE”) bonds, mortgage backed securities (“MBS”), collateralized mortgage obligations (“CMOs”), mutual funds, corporate securities, and municipal securities.
Our available-for-sale securities portfolioany point. The funding rate is primarily invested in residential CMOs and residential and commercial MBS, which comprised 94% of our total available-for-sale portfolio as of December 31, 2017 and 2016. At December 31, 2017 and 2016, all of our CMOs and MBS were issued by the Government National Mortgage Association (“GNMA”), Fannie Mae (“FNMA”), or Freddie Mac (“FHLMC”), which guarantee the contractual cash flows of these investments.
The following table presents the amortized cost, estimated fair value, and unrealized gain and losses on our investment securities as of the dates indicated:
 December 31,
 2017 2016
 
Amortized
Cost
 
Estimated
Fair
Value
 
Unrealized
Loss
 
Amortized
Cost
 
Estimated
Fair
Value
 
Unrealized
Gain (Loss)
 (Dollars in thousands)
Debt securities*:           
Agency securities$—
 $—
 $—
 $12,005
 $12,008
 $3
CMOs856,193
 838,709
 (17,484) 715,981
 705,667
 (10,314)
MBS:          

Residential477,676
 471,214
 (6,462) 611,201
 602,852
 (8,249)
Commercial308,046
 301,365
 (6,681) 130,103
 125,089
 (5,014)
Corporate Securities4,997
 4,475
 (522) 11,576
 11,127
 (449)
Municipal Securities82,542
 82,537
 (5) 88,018
 86,839
 (1,179)
Total debt securities1,729,454
 1,698,300
 (31,154) 1,568,884
 1,543,582
 (25,202)
Mutual funds22,425
 21,957
 (468) 13,425
 13,058
 (367)
Total$1,751,879
 $1,720,257
 $(31,622) $1,582,309
 $1,556,640
 $(25,569)
* GSE bonds were issued by GNMA, FNMA, and FHLMC and are all mortgage-backed securities.


48

The following table summarizes the maturity of securitiesdetermined based on carrying value and their related weighted average yield (non-tax equivalent) at December 31, 2017:
 Within One Year 
After One But
Within Five Years
 
After Five But
Within Ten Years
 After Ten Years Total
 Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
 (Dollars in thousands)
CMOs$—
 —% $—
 —% $7,278
 1.48% $831,431
 2.25% $838,709
 2.24%
MBS:                

  
Residential—
 —% —
 —% 90,697
 1.94% 380,517
 2.35% 471,214
 2.27%
Commercial—
 —% —
 —% 161,663
 2.75% 139,702
 2.27% 301,365
 2.53%
Corporate Securities—
 —% —
 —% —
 —% 4,475
 3.51% 4,475
 3.51%
Municipal Securities—
 —% 11,729
 4.00% 33,581
 3.24% 37,227
 4.24% 82,537
 3.80%
Mutual funds  —% —
 —% 21,957
 2.04% —
 —% 21,957
 2.04%
Total$—
 —% $11,729
 4.00% $315,176
 2.49% $1,393,352
 2.34% $1,720,257
 2.37%

The following table shows our investments with gross unrealized losses and their estimated fair values, aggregated by investment category and lengtha lookback period of time that individual securities have been in a continuous unrealized loss position, at December 31, 2017:
 Less than 12 months 12 months or longer Total
Description of
Securities
Number of
Securities
 Fair Value 
Gross
Unrealized
Losses
 
Number of
Securities
 Fair Value 
Gross
Unrealized
Losses
 
Number of
Securities
 Fair Value 
Gross
Unrealized
Losses
   (Dollars in thousands)
CMOs*38
 $425,198
 $(5,954) 53
 $408,526
 $(11,588) 91
 $833,724
 $(17,542)
MBS:                 
Residential*20
 195,086
 (1,282) 23
 230,616
 (5,701) 43
 425,702
 (6,983)
Commercial*16
 186,357
 (1,614) 8
 115,008
 (5,067) 24
 301,365
 (6,681)
Corporate securities1
 4,475
 (522) —
 —
 —
 1
 4,475
 (522)
Municipal securities18
 9,295
 (69) 3
 22,144
 (806) 21
 31,439
 (875)
Mutual funds1
 8,899
 (101) 3
 11,579
 (384) 4
 20,478
 (485)
Total94
 $829,310
 $(9,542) 90
 $787,873
 $(23,546) 184
 $1,617,183
 $(33,088)
* Investments in U.S. Government agency and U.S. Government sponsored enterprises

ASC 320 requires an entity to assess whether the entity has the intent to sell a debt security or more likely than not will be required to sell the debt security before its anticipated recovery. If either of these conditions is met, an entity must recognize an other than temporary impairment (“OTTI”). If an entity does not intend to sell the debt security and will not be required to sell the debt security, the entity must consider whether it will recover the amortized cost basis of the security. If the present value of expected cash flows is less than the amortized cost basis of the security, OTTI shall be considered to have occurred. OTTI is then separated into the amount of the total impairment related to credit losses and the amount of the total impairment related to all other factors. An entity determines the impairment related to credit losses by comparing the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. OTTI related to the crediteight quarters. Credit loss is then recognized in earnings. OTTI related to all other factors is recognized in other comprehensive income.
ASC 320 requires an entity to assess whether the entity plans to sell an equity security and does not expect the fair value of the equity security to recoverestimated for off-balance sheet credit exposures that are unconditionally cancellable by the time of the sale. If both of these conditions are met, an entity must recognize OTTI when the decision to sell is made. The entity considers facts and circumstances presentus at the time of assessment, which include the considerationmeasurement.
OREO
OREO consists of general market conditions, and the duration and extent to which thereal estate properties acquired through foreclosure or similar means. OREO is recorded at fair value, is below cost. OTTI related to equity securities is recognized in earnings.
We evaluate securities for OTTI on at least a quarterly basis,less estimated selling costs. At December 31, 2023 and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the financial condition2022, OREO, net, totaled $63 thousand and near-term prospects$2.4 million, respectively. The number of the issuer, the length of time and the extent to which the fair value of the securities has been less than our cost for the securities, and our intention to sell, or whether it is more likely than not that we will be required to sell, a security in an unrealized loss position before recovery of its amortized

49

cost basis. In analyzing an issuer’s financial condition, we consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition.
We consider the losses on our investments in an unrealized loss positionOREO properties held at December 31, 2017 to be temporary based on: 1)2023 and 2022, was one and four, respectively. For the likelihood of recovery; 2) the information available to us relative to the extent and duration of the decline in market value; and 3) our intention not to sell, and our determination that it is more likely than not that we will not be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. The increase in the net unrealized loss position can be attributed to the change in Treasury yields due to the increases in interest rates atyear ended December 31, 2017 compared2023, one property was transferred to rates atOREO totaling $105 thousand and we sold two OREO properties with carrying balances totaling $2.4 million. For the year ended December 31, 2016.2022, one property was transferred to OREO totaling $938 thousand and we sold three OREO properties totaling $702 thousand.
The changes in OREO for the years ended December 31, 2023 and 2022, were as follows:
Year Ended December 31,
20232022
(Dollars in thousands)
Balance at beginning of period$2,418 $2,597 
Additions to OREO105 938 
OREO sales(2,418)(702)
Valuation adjustments, net(42)(415)
Balance at end of period$63 $2,418 
Deposits
Deposits are our primary source of funds for loans and investments. We offer a wide variety of deposit account products to commercial and consumer customers. Total deposits increaseddecreased to $10.85$14.75 billion at December 31, 20172023, from $10.64$15.74 billion at December 31, 2016.
The increase in deposits during 2017 was primarily due to an increase in time deposits and noninterest bearing demand deposits in 2017 partially offset by a decline in money market and savings accounts.2022. At December 31, 2017,2023, we had $797.1 million$1.54 billion in brokered time deposits and money market accounts and $300.0 million in California State Treasurer deposits compared to $724.7 millionwith $1.18 billion in brokered time deposits and money market accounts and $300.0 million in California State Treasurer deposits at December 31, 2016.2022. The brokered deposits represented approximately 7.3%10.43% of our total deposits as ofat December 31, 20172023, compared to 6.8% as ofwith 7.50% at December 31, 2016.2022. The year-over-year increase in brokered deposits reflects the impact the banking industry disruption caused by bank failures in the first half of 2023. The California State Treasurer deposits have uphad remaining maturities of three to six months maturities withand a weighted average interest rate of 1.37%5.41% and 4.27% at December 31, 2017 compared2023 and 2022, respectively.
The decrease in deposits during 2023 was primarily due to 0.45% atdecreases in demand deposits and money market deposits, partially offset by increases in time deposits and savings deposits. Noninterest bearing demand deposits decreased $934.5 million during 2023, due primarily to a decline in business noninterest bearing deposits during the year. Time deposits increased $976.7 million from December 31, 2016.2022, to December 31, 2023, due to an increase in customer deposits of $712.1 million and in brokered time deposits of $264.6 million.
Although our deposits may vary with local and national economic conditions, we do not believe that our deposits are seasonal in nature. The following table sets forth the balances of our deposits by category for the periods indicated:
 December 31,
 202320222021
 AmountPercentAmountPercentAmountPercent
 (Dollars in thousands)
Demand, noninterest bearing$3,914,967 27 %$4,849,493 31 %$5,751,870 38 %
Money market, interest bearing demand and savings4,872,029 33 %5,899,248 38 %6,500,227 43 %
Time deposit of more than $250,0002,240,547 15 %2,385,573 15 %1,493,651 10 %
Other time deposits3,726,210 25 %2,604,487 16 %1,294,702 9 %
Total deposits$14,753,753 100 %$15,738,801 100 %$15,040,450 100 %
56

 December 31,
 2017 2016 2015
 Amount Percent Amount Percent Amount Percent
 (Dollars in thousands)
Demand, noninterest bearing$2,998,734
 27% $2,900,241
 27% $1,694,427
 27%
Demand, interest bearing3,332,703
 31% 3,401,446
 32% 1,983,250
 31%
Savings240,509
 2% 301,906
 3% 187,498
 3%
Time deposit of more than $250,0001,279,108
 12% 1,077,024
 10% 1,021,937
 16%
Other time deposits2,995,555
 28% 2,961,418
 28% 1,453,864
 23%
Total Deposits$10,846,609
 100% $10,642,035
 100% $6,340,976
 100%


The following table indicatespresents the maturity schedules of our time deposits, for the yearsat dates indicated:
 December 31,
 202320222021
 AmountPercentageAmountPercentageAmountPercentage
 (Dollars in thousands)
Three months or less$2,111,444 35 %$1,166,952 23 %$1,262,868 45 %
Over three months through six months1,592,668 27 %1,003,444 21 %571,155 21 %
Over six months through twelve months2,206,373 37 %2,802,627 56 %892,462 32 %
Over twelve months56,272 1 %17,037 — %61,868 2 %
Total time deposits$5,966,757 100 %$4,990,060 100 %$2,788,353 100 %
 December 31,
 2017 2016 2015
 Amount Percentage Amount Percentage Amount Percentage
 (Dollars in thousands)
Three months or less$857,761
 20% $1,006,581
 25% $700,991
 28%
Over three months through six months1,075,202
 25% 719,986
 18% 467,615
 19%
Over six months through twelve months1,923,003
 45% 1,761,056
 43% 1,083,248
 44%
Over twelve months418,697
 10% 550,819
 14% 223,947
 9%
Total time deposits$4,274,663
 100% $4,038,442
 100% $2,475,801
 100%


50

The following table indicates the maturity schedules of our time deposits in amounts of more than $250,000 as of at December 31, 2017:2023:
AmountPercentage
 Amount Percentage
 (Dollars in thousands)
(Dollars in thousands)(Dollars in thousands)
Three months or less $249,568
 20%Three months or less$625,801 28 28 %
Over three months through six months 473,313
 37%Over three months through six months654,165 29 29 %
Over six months through twelve months 493,054
 38%Over six months through twelve months951,816 43 43 %
Over twelve months 63,173
 5%Over twelve months8,765 — — %
Total $1,279,108
 100%Total$2,240,547 100 100 %
There can beis no assurance that we will be able to continue to replace maturing time deposits at competitive rates. However, if we are unable to replace these maturing time deposits with new deposits, we believe that we have adequate liquidity resources to fund these obligations through secured credit lines with the FHLB and FRB, as well as with liquid assets.
At December 31, 2023, total uninsured deposits of the Bank reported by the Bank was approximately $5.67 billion, or 38% of the Bank’s deposits, which represents the estimated portion of deposit accounts that exceed the FDIC insurance limit. This estimate was determined based on the same methodologies and assumptions used for regulatory reporting requirements.
FHLB and FRB Borrowings and Fed Funds Purchased
We utilize a combination of short-term and long-term borrowings from the FHLB and FRB as well as other sources to help manage our liquidity position. However, borrowings are used as a secondary source of funds and deposits are our main source of funding and liquidity.
Federal Funds Purchased
Federal funds purchased generally mature within one to three business days from the transaction date. At December 31, 2017, we had $69.9 million in overnight federal funds purchased at an average weighted rate of 1.79%. We did not have any federal funds purchased at December 31, 2016.2023 and 2022.
FHLB Advancesand FRB Borrowings
We may borrow from the FHLB and FRB on a short term or long term basis to provide funding for certain loans or investment securities strategies, as well as for asset liability management strategies. As ofAt December 31, 20172023, borrowings totaled $1.80 billion consisting of $100.0 million in FHLB borrowings and 2016,$1.70 billion in FRB borrowings compared with $865.0 million in FHLB advances totaled $1.16 billionborrowings at December 31, 2022. At December 31, 2023 and $754.3 million with2022, the average weighted remaining maturitiesmaturity of 2.0 yearsFHLB and 2.2 years,FRB borrowings was three months and less than one month, respectively. The weighted average rate net of fair value adjustments, for FHLB advances was 1.63%and FRB borrowings were 5.73% and 4.47%, respectively, at December 31, 20172023, compared to 1.22%with 3.40% and 4.50% for FHLB advances and FRB borrowings, respectively, at year-end 2016. As of December 31, 2017,2022. At December 31, 2023, FRB borrowings consisted of $1.70 billion in borrowings from the BTFP at an average weighted rate of 4.47% maturing in the first half of 2024. Given its attractive cost and structure, the BTFP was utilized to bolster on-balance sheet liquidity in response to the banking industry disruption caused by bank failures in the first half of 2023. Correspondingly, cash and cash equivalent levels increased to $1.93 billion at December 31, 2023, up from $506.8 million at December 31, 2022. At December 31, 2023, our remaining available FHLB borrowing capacity at the FHLB and the FRB was $2.32an aggregate of $4.71 billion. See Note 8
57


Convertible Notes
In 2018, we issued $217.5 million aggregate principal amount of 2.00% convertible senior notes maturing on May 15, 2038, in a private offering to qualified institutional buyers under Rule 144A of the Securities Act of 1933. The convertible notes were issued as part of our plan to repurchase common stock. The convertible notes pay interest on a semi-annual basis to holders of the notes. The convertible notes can be called by us, in whole or in part, at any time after five years for the original issued amount in cash. Holders of the notes can put the notes for cash on the fifth, tenth, and fifteenth year of the notes.
The net carrying balance of convertible notes at December 31, 2023, was $444 thousand. During the year ended December 31, 2023, we repurchased notes in the aggregate principal amount of $19.9 million and recorded a gain on debt extinguishment of $405 thousand. The repurchased notes were immediately cancelled subsequent to repurchase. On May 15, 2023, most holders of our convertible notes exercised their right to put their notes and therefore we paid off $197.1 million of convertible note principal in cash. At December 31, 2022, the net carrying balance of convertible notes was $217.1 million, net of $352 thousand in uncapitalized issuance costs. With the adoption of ASU 2020-06, our convertible notes are accounted for entirely as debt and no longer has a discount or equity portion. (See Note 10 “Subordinated Debentures and Convertible Notes” of the Notes to Consolidated Financial Statements for more detailedadditional information on FHLB advances.regarding convertible notes issued).
Subordinated Debentures
At December 31, 2017,2023, our nine wholly-owned subsidiary grantor trusts (“Trusts”) had issued $126.0$126.0 million of pooled trust preferred securities (“Trust Preferred Securities”). The Trust Preferred Securities accrue and pay distributions periodically at specified annual rates as provided in the related indentures for the securities. The Trusts used the net proceeds from the offering of the Trust Preferred Securities to purchase a like amount of Hope Bancorp’s subordinated debentures (the “Debentures”) issued by us.. The Debentures are the sole assets of the trusts. Our obligations under the Debentures and related documents, taken together, constitute a full and unconditional guarantee by us of the obligations of the trusts. The Trust Preferred Securities are mandatorily redeemable upon the maturity of the Debentures, or upon earlier redemption as provided in the indentures. We have the right to redeem the Debentures in whole (but not in part) on or after specific dates, at a redemption price specified in the indentures plus any accrued but unpaid interest to the redemption date.
As of Debentures totaled $107.8 million at December 31, 20172023, and 2016,$106.6 million at December 31, 2022.
At December 31, 2023 and 2022, the Trusts are not reported on a consolidated basis pursuant to ASC 810, Consolidation.Consolidation. Therefore, the capital securities of $126.0$126.0 million are not presented on the consolidated statementsConsolidated Statements of financial condition.Financial Condition. Instead, at December 31, 2023, the long-term subordinated debentures of $100.9$107.8 million, as net of December 31, 2017,$22.1 million in discounts, issued by us to the Trusts and the investment in Trusts’ common stock of $3.9 million (included in other assets) are separately reported. During the third quarter of 2016, we acquired four subordinated debentures from Wilshire at a fair value of $56.9 million, net of $25.5 million in total discount.

51

The following table summarizes our outstanding Debentures related to the Trust Preferred Securities at December 31, 2017:2023:
Trust NameIssuance DateAmountCarry Value of Subordinated DebenturesMaturity
Date		Coupon RateCurrent Rate
Interest Distribution
and Callable Date
(Dollars in thousands)
Nara Capital Trust III06/05/2003$5,000 $5,155 06/15/20333M SOFR + 0.26% + 3.15%8.80%
Every 15th of
Mar, Jun, Sep, and Dec
Nara Statutory Trust IV12/22/20035,000 5,155 01/07/20343M SOFR + 0.26% + 2.85%8.51%
Every 7th of
Jan, Apr, Jul and Oct
Nara Statutory Trust V12/17/200310,000 10,310 12/17/20333M SOFR + 0.26% + 2.95%8.59%
Every 17th of
Mar, Jun, Sep and Dec
Nara Statutory Trust VI03/22/20078,000 8,248 06/15/20373M SOFR + 0.26% + 1.65%7.30%
Every 15th of
Mar, Jun, Sep and Dec
Center Capital Trust I12/30/200318,000 15,197 01/07/20343M SOFR + 0.26% + 2.85%8.51%
Every 7th of
Jan, Apr, Jul, and Oct
Wilshire Statutory Trust II03/17/200520,000 16,681 03/17/20353M SOFR + 0.26% + 1.79%7.43%
Every 17th of
Mar, Jun, Sep, and Dec
Wilshire Statutory Trust III09/15/200515,000 11,931 09/15/20353M SOFR + 0.26% + 1.40%7.05%
Every 15th of
Mar, Jun, Sep, and Dec
Wilshire Statutory Trust IV07/10/200725,000 19,245 09/15/20373M SOFR + 0.26% + 1.38%7.03%
Every 15th of
Mar, Jun, Sep, and Dec
Saehan Capital Trust I03/30/200720,000 15,903 06/30/20373M SOFR + 0.26% + 1.62%7.21%
Every 30th of
Mar, Jun, Sep, and Dec
Total Trust$126,000 $107,825 
58

Trust Name Issuance Date Amount Carry Value of Subordinated Debentures 
Maturity
Date
 Coupon Rate Current Rate 
Interest Distribution
and Callable Date
(Dollars in thousands)
Nara Capital Trust III 06/05/2003 $5,000
 $5,155
 06/15/2033 
3 month LIBOR
+ 3.15%
 4.74% 
Every 15th of
Mar, Jun, Sep, and Dec
Nara Statutory Trust IV 12/22/2003 5,000
 5,155
 01/07/2034 
3 month LIBOR
+ 2.85%
 4.21% 
Every 7th of
Jan, Apr, Jul and Oct
Nara Statutory Trust V 12/17/2003 10,000
 10,310
 12/17/2033 
3 month LIBOR
+ 2.95%
 4.55% 
Every 17th of
Mar, Jun, Sep and Dec
Nara Statutory Trust VI 03/22/2007 8,000
 8,248
 06/15/2037 
3 month LIBOR
+1.65%
 3.24% 
Every 15th of
Mar, Jun, Sep and Dec
Center Capital Trust I 12/30/2003 18,000
 13,827
 01/07/2034 
3 month LIBOR
+2.85%
 4.21% 
Every 7th of
Jan, Apr, Jul and Oct
Wilshire Statutory Trust II 03/17/2005 20,000
 15,314
 03/17/2035 
3 month LIBOR
+1.79%
 3.39% 
Every 17th of
Mar, Jun, Sep, and Dec
Wilshire Statutory Trust III 09/15/2005 15,000
 10,767
 09/15/2035 
3 month LIBOR
+1.40%
 2.99% 
Every 15th of
Mar, Jun, Sep, and Dec
Wilshire Statutory Trust IV 07/10/2007 25,000
 17,479
 09/15/2037 
3 month LIBOR
+1.38%
 2.97% 
Every 15th of
Mar, Jun, Sep, and Dec
Saehan Capital Trust I 03/30/2007 20,000
 14,598
 06/30/2037 
3 month LIBOR
+1.62%
 3.31% 
Every 30th of
Mar, Jun, Sep, and Dec
Total Trust   $126,000
 $100,853
        

Capital Resources
Historically, our primary source of capital has been the retention of earnings, net of interest payments on debentures and convertible notes and dividend payments to shareholders.stockholders and share repurchases. We seek to maintain capital at a level sufficient to assure our stockholders, our customers, and our regulators that Hope Bancorp and the Bank subsidiary are financially sound. For this purpose, we perform ongoing assessments of ourcapital related risks, components of capital, as well as projected sources and uses of capital in conjunction with projected increases in assets and levels of risk.
In conjunction with the acquisition of PIB, we assumed a warrant (related to the TARP Capital Purchase Plan) to purchase shares of its common stock. At the acquisition date, the warrants were canceled and converted into a warrant to purchase BBCN Bancorp common stock which expires on December 12, 2018. As of December 31, 2017, the U.S. Treasury Department held the warrant for the purchase of 20,379 shares of our common stock.
On July 29, 2016 we acquired Wilshire in an all-stock transaction. Pursuant to the merger agreement, Wilshire shareholders received 0.7034 shares of our common stock for each share of Wilshire stock owned. We therefore issued 55,493,726 shares of its common stock to Wilshire shareholders at $15.37 per share. This resulted in the issuance of $852.9 million in common shares of HOPE stock during the third quarter of 2016.
Our total stockholders’ equity increased $72.8$101.9 million, or 3.9%5.0%, to $1.93$2.12 billion at December 31, 20172023, from $1.86$2.02 billion at December 31, 2016. Net2022. The increase in our stockholders’ equity at December 31, 2023, compared with December 31, 2022, was largely due to net income earned of $139.4$133.7 million, during the year contributedan increase in AOCI of $26.1 million, and an increase in additional paid-in capital consisting of $9.0 million in stock-based compensation, offset partially by dividends paid of $67.1 million. The increase in AOCI from December 31, 2022, to December 31, 2023, was due to the increase in overall stockholders’ equity, partially offset by a decrease in equity from other comprehensive loss of $3.5 million, a reclassification of stranded tax effects of $3.6 million, and dividends paid on common stock of $67.7 million. As permitted by ASU 2018-02, we reclassified $3.6 million in stranded tax effects in accumulated other comprehensive income that resulted from the reduction in corporate tax rates to retained earnings related to the deferred tax assets for unrealized losses on investmentsour investment securities and interest only strip. The total reclassification for the year ended December 31, 2017 was $3.6 million. AFS as a result of changes to market rates.
At December 31, 2017,2023, our ratio of common equity to total assets was 13.57%11.09% compared to 13.80%with 10.54% at December 31, 2016,2022, and our tangible common equity represented 10.54%8.86% of tangible assets at December 31, 2017,2023, compared with 10.60%8.29% of tangible assets at December 31, 2016.2022. Tangible common equity per share was $10.68$13.76 at December 31, 2017,2023, compared with $10.15$12.96 at December 31, 2016.2022. Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and net other intangible assets divided by total assets less goodwill and net other intangible assets. We review tangible common equity to tangible assetsper share are non-GAAP financial measures that we believe provide investors with information that is useful in evaluating the capital levels.understanding our financial performance and position.
We provide certain non‑GAAP financial measures that we believe provide investors with meaningful supplemental information that is useful in understanding our financial performance and position. The methodologies for determining non-GAAP measures may differ among companies. The following tables comparetable reconciles non-GAAP financial measures used to the most comparable GAAP performance measures:
December 31,
20232022
(Dollars in thousands, except share and per share data)
Total stockholders’ equity$2,121,243 $2,019,328 
Less: Goodwill and core deposit intangible assets, net(468,385)(470,176)
Tangible common equity (“TCE”)$1,652,858 $1,549,152 
Total assets$19,131,522 $19,164,491 
Less: Goodwill and core deposit intangible assets, net(468,385)(470,176)
Tangible assets$18,663,137 $18,694,315 
Common shares outstanding120,126,786 119,495,209 
TCE ratio
(TCE / tangible assets)
8.86 %8.29 %
Common tangible equity per share
(TCE / common shares outstanding)
$13.76 $12.96 
59


The following table compares Hope Bancorp’s and the Bank’s actual capital ratios at December 31, 20172023, to those required by our regulatory agencies to generally be deemed “adequately capitalized” for capital adequacy classification purposes:

 December 31, 2023
 ActualRequired To Be Adequately-CapitalizedExcess Over Adequately-Capitalized
 AmountRatioAmountRatioAmountRatio
(Dollars in thousands)
Hope Bancorp
Common equity tier 1 capital
(to risk-weighted assets):		$1,869,774 12.28 %$685,364 4.50 %$1,184,410 7.78 %
Tier 1 capital
(to risk-weighted assets)		$1,973,698 12.96 %$913,818 6.00 %$1,059,880 6.96 %
Total capital
(to risk-weighted assets)		$2,120,157 13.92 %$1,218,424 8.00 %$901,733 5.92 %
Leverage capital
(to average assets)		$1,973,698 10.11 %$781,008 4.00 %$1,192,690 6.11 %
Bank of Hope
Common equity tier 1 capital
(to risk-weighted assets):		$1,940,303 12.75 %$685,056 4.50 %$1,255,247 8.25 %
Tier 1 capital
(to risk-weighted assets)		$1,940,303 12.75 %$913,408 6.00 %$1,026,895 6.75 %
Total capital
(to risk-weighted assets)		$2,086,762 13.71 %$1,217,878 8.00 %$868,884 5.71 %
Leverage capital
(to average assets)		$1,940,303 9.94 %$781,172 4.00 %$1,159,131 5.94 %
52

 December 31, 2017
 Actual Required Excess
 Amount Ratio Amount Ratio Amount Ratio
 (Dollars in thousands)
Hope Bancorp           
Common equity tier 1 capital (to risk-weighted assets):$1,471,193
 12.30% $538,435
 4.50% $932,758
 7.80%
Total capital
(to risk-weighted assets)
$1,653,521
 13.82% $957,217
 8.00% $696,304
 5.82%
Tier 1 capital
(to risk-weighted assets)
$1,568,144
 13.11% $717,913
 6.00% $850,231
 7.11%
Tier 1 capital
(to average assets)
$1,568,144
 11.54% $543,528
 4.00% $1,024,616
 7.54%
 December 31, 2017
 Actual Required Excess
 Amount Ratio Amount Ratio Amount Ratio
 (Dollars in thousands)
Bank of Hope           
Common equity tier 1 capital (to risk-weighted assets):$1,548,401
 12.95% $538,178
 4.50% $1,010,223
 8.45%
Total capital
(to risk-weighted assets)
$1,633,778
 13.66% $956,761
 8.00% $677,017
 5.66%
Tier 1 capital
(to risk-weighted assets)
$1,548,401
 12.95% $717,571
 6.00% $830,830
 6.95%
Tier 1 capital
(to average assets)
$1,548,401
 11.40% $543,441
 4.00% $1,004,960
 7.40%
New Capital Rules requiresrules require a capital conservation buffer of 2.50% above the three minimum risked weightedrisked-weighted capital ratios. In January 2016, the capital conservation buffer startedratios to phase in at 0.625%avoid constraints on dividend payments, stock repurchases, and increases at annual increments of 0.625% until fully-phased in January 2019. At January 1, 2016, the capital conservation buffer stood was 0.625% and increaseddiscretionary bonus payments to 1.25% at January 1, 2018, and increased again to 1.875% on January 1, 2018, and will be fully phased-in on January 1, 2019 at 2.50%.executives. Our capital ratios at December 31, 20172023 and December 31, 20162022, exceeded all of the regulatory minimums including the fully-phased in capital conservation buffer.
Liquidity Management
Liquidity risk is the risk of reduction in our earnings or capital that wouldcould result if we were not able to meet our obligations when they come due without incurring unacceptable losses. Liquidity risk includes the risk of unplanned decreases or changes in funding sources and changes in market conditions that affect our ability to liquidate assets quickly and with minimum loss of value. Factors considered in liquidity risk management are the stability of the deposit base; the marketability, maturity, and pledging of our investments; the availability of alternative sources of funds; and our demand for credit.
The objective of our liquidity management is to have funds available to meet cash flow requirements arising from fluctuations in deposit levels and the demands of daily operations, which include funding of securities purchases, providing for customers’ credit needs, and ongoing repayment of borrowings.
We manage our liquidity actively on a daily basis and it is reviewed periodically by our management-level Asset/Liability Management Committee (“ALM”) and the Board Asset LiabilityRisk Committee (“ALCO”BRC”). This process is intended to ensure the maintenance of sufficient funds to meet our liquidity needs, including adequate cash flow for off-balance-sheet commitments. In general, our liquidity is managed daily by controlling the level of federal funds and the funds provided by cash flow from operations. To meet unexpected demands, lines of credit are maintained with the FHLB, the Federal Reserve Bank, and other correspondent banks. These lines of credit are tested at least annually for funds availability. The sale of investment securities and loans held for sale also serves as a source of funds.
Our primary sources of liquidity are derived from financing activities, which include customer and broker deposits, federal funds facilities, and borrowings from the FHLB and the FRBFRB’s Discount Window.Window and BTFP. These funding sources are augmented by payments of principal and interest on loans, proceeds from sale of loans, pay down of investment securities, and the liquidation or sale of

53

securities from our available-for-saleAFS portfolio. Primary uses of funds include withdrawal of and interest payments on deposits, originations of loans, purchases of investment securities, payment of operating expenses, share repurchases, and payment of dividends.
60


Net cash inflows from operating activities totaled $203.9$473.8 million, $130.6$485.5 million, and $108.1$324.2 million during 2017, 20162023, 2022 and 2015,2021, respectively. Net cash inflows from operating activities for 20172023 were primarily attributable to net changes in accrued interest payable, proceeds from sales of loans held for sale, net changes in other assets, and net income, partially offset by originations of loans held for sale loans.sale.
Net cash inflows from investing activities totaled $1.29 billion during 2023, and net cash outflows from investing activities totaled $767.3 million, $463.4 million$1.47 billion and $935.0$993.0 million during 2017, 20162022 and 2015,2021, respectively. Net cash outflows forinflows from investing activities during 20172023 were primarily from purchases of securities available for sale and thea net changedecrease in loans receivable. These outflows were offset byreceivable, proceeds received forfrom investment securities available for saleAFS and investment securities HTM that were paid down during the year.year, and proceeds received from sales of loans. These inflows were partially offset by purchases of investment securities.
Net cash outflows from financing activities totaled $341.5 million during 2023, and net cash inflows from financing activities totaled $548.2 million, $471.7 million$1.18 billion, and $663.1$634.5 million during 2017, 20162022 and 2015,2021, respectively. Net cash inflowsoutflows from financing activities for 20172023 was primarily attributable to an increasethe repayment of FRB borrowings, the repayment of FHLB advances, a decrease in deposits, repurchase and net proceeds from FHLB advances partially offset byrepayment of convertible notes, and dividends paid on common stock. These outflows were partially offset by proceeds from FRB borrowings and FHLB advances.
When we have more funds than required for our reserve requirements or short-term liquidity needs, we sell federal funds to other financial institutions. Conversely, when we have less funds than required, we may purchase federal funds or borrow funds from the FHLB or the FRB’s Discount Window. As ofWindow and BTFP. At December 31, 2017,2023, the maximum amount that we were able to borrow on an overnight basis from the FHLB and the FRB was an aggregate of $4.10$6.51 billion, and we had $1.23 billion$100.0 million in federal funds purchased and borrowings from the FHLB (including $2.7 millionand $1.70 billion in premiums from acquired advances) and no borrowings outstanding from the FRB. The FHLB System functions as a line of credit facility for qualifying financial institutions. As a member, we are required to own capital stock in the FHLB and may apply for advances from the FHLB by pledging qualifying mortgage loans and certain securities as collateral for these advances.
At times we maintain a portion of our liquid assets in interest bearingearning cash deposits with other banks, in overnight federal funds sold to other banks, and in investment securities available for saleAFS that are not pledged. Our liquid assets consist of cash and cash equivalents, interest bearingearning cash deposits with other banks, overnight federal funds sold to other banks, liquid investment securities available for sale,AFS, and loan repayments within 30 days. Liquid assets totaled $1.73$2.47 billion and $1.53$2.19 billion at December 31, 20172023 and 2016,2022, respectively. Cash and cash equivalents including federal funds sold, totaled $492.0$1.93 billion at December 31, 2023, compared with $506.8 million at December 31, 2017 compared to $437.3 million at December 31, 2016.2022.
Because our primary sources and uses of funds are deposits and loans, the relationship between gross loans and total deposits provides one measure of our liquidity. Typically, the closer the ratio of loans to deposits is to, or the more it exceeds 100%, the more we rely on borrowings and other sources to provide liquidity. Alternative sources of funds such as FHLB advances and FRB borrowings, brokered deposits, and other collateralized borrowings that provide liquidity as needed from diverse liability sources are an important part of our asset/liability management strategy. For 2017, ourOur average gross loanloans to average depositdeposits ratio was 99% unchanged from 201694%, 96% and 2015.91% for years ended 2023, 2022 and 2021.
We believe our liquidity sources to be stable and adequate to meet our day-to-day cash flow requirements. At December 31, 2017,2023, management was not aware of any demands, commitments, trends, events, or uncertainties that will or are reasonably likely to have a material or adverse effect on our liquidity position. As of At December 31, 2017,2023, we are not aware of any material commitments for capital expenditures in the foreseeable future.
Off-Balance- SheetOff-Balance-Sheet Activities and Contractual Obligations
The Bank routinely engages in activities that involve, to varying degrees, elements of risk that are not reflected, in whole or in part, in the Consolidated Financial Statements. These activities are part of our normal course of business and include traditional off-balance-sheet credit-related financial instruments, interest rate swap contracts, operating leases, and long-term debt.interest commitments on our liabilities.
Traditional off-balance-sheet credit-related financial instruments are primarily commitments to extend credit and standby letters of credit. These activities may require us to make cash payments to third parties in the event specified future events occur. The contractual amounts represent the extent of our exposure in these off-balance-sheet activities. However, since certain off-balance-sheet commitments, particularly standby letters of credit, are expected to expire or be only partially used, the total amount of commitments does not necessarily represent future cash requirements. These activities are necessary to meet the financing needs of our customers.
We do not anticipate that our current off-balance-sheet activities will have a material impact on our future results of operations or financial condition. Further information regarding risks from our off-balance-sheet financial instruments can be found in Note 14 of the Notes to Consolidated Financial Statements and in Item 7A. - “Quantitative and Qualitative Disclosures about Market Risk.”

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We also commit to fund certain affordable housing partnership investments in the future. Funded commitments are presented as investments in affordable housing partnerships in the Consolidated Financial Statements while unfunded commitments are presented as commitments to fund investment in affordable housing partnerships.
We lease our banking facilities and equipment under non-cancelable operating leases, which have remaining terms of up to 15 years. Our facility lease obligations are discussed in Note 14 of the Notes to Consolidated Financial Statements.
The following table summarizes our contractual obligations and commitments to make future payments as ofat December 31, 2017.2023. Payments shown for time deposits, subordinated debentures, and FHLB advances, convertible notes, and subordinated debenture include interest obligation to their respective repricing or next call dates:
 Payments Due By Period
 Less than 1 year1-3 years3-5 yearsOver 5 yearsTotal
 (Dollars in thousands)
Contractual Obligations and Commitments
Time deposits$6,174,324 $20,233 $1,902 $— $6,196,459 
FHLB and FRB borrowings1,872,411 — — — 1,872,411 
Convertible notes445 — — — 445 
Subordinated debentures (1)
128,491 — — — 128,491 
Operating leases15,524 27,202 10,688 2,542 55,956 
Commitments to fund investments in affordable housing partnerships6,532 8,590 4,147 1,748 21,017 
Unfunded commitments to extend credit1,298,033 680,692 244,289 51,225 2,274,239 
Standby letters of credit121,444 9,526 1,162 — 132,132 
Other commercial letters of credit51,478 505 — — 51,983 
Total$9,668,682 $746,748 $262,188 $55,515 $10,733,133 
 Payments Due By Period
 Less than 1 year 1-3 years 3-5 years Over 5 years Total
 (Dollars in thousands)
Contractual Obligations and Commitments         
Time deposits$3,889,238
 $397,581
 $25,515
 $—
 $4,312,334
FHLB advances and federal funds purchased *446,074
 529,679
 296,981
 —
 1,272,734
Subordinated debentures *881
 —
 —
 100,853
 101,734
Operating lease obligations14,055
 21,898
 14,882
 15,863
 66,698
Commitments to fund investments in affordable housing partnerships29,052
 7,035
 559
 1,821
 38,467
Unused credit extensions1,116,157
 319,258
 54,761
 36,805
 1,526,981
Standby letters of credit70,261
 487
 —
 —
 70,748
Other commercial letters of credit71,698
 2,449
 —
 —
 74,147
Total$5,637,416
 $1,278,387
 $392,698
 $155,342
 $7,463,843
___________________
*(1)     Interest for variable rate subordinated debentures and FHLB advances were calculated using interest rates at December 31, 2017.


2023.
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Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The objective of ourthe Company’s asset and liability management activities is to improve ouroptimize earnings while maintaining adequate liquidity and maintaining exposure to interest rate risk deemed to be acceptable by management, by adjusting the type and mix of assets and liabilities to effectively address changing conditions and risks. Through overall management of our balance sheet and by controlling various risks, we seek to optimize our financial returns within safe and sound parameters. OurPrimary operating strategies for attaining this objective include managing ourthe net interest margin through appropriate risk/return pricing of assets and liabilities, and emphasizing growth in retail deposits, as a percentage of interest bearing liabilities,low-cost, stable customer deposits. Various methods are used to reduce our cost of funds. We also seek to improve earnings by controlling noninterest expense, and enhancing noninterest income. We use risk management instruments to modify interest rate characteristics of certain assets and liabilities to hedgeprotect against our exposure to interest rate fluctuations, reducing the effects theseof fluctuations might have on associated cash flows or values. We also perform periodic internalInternal analyses are performed to measure, evaluate, and monitor marketliquidity and interest rate risk.
Interest Rate Risk
Market risk is the risk of loss to future earnings, to the fair value of our assets and liabilities, or to future cash flows that may result from changes in the price of a financial instrument. Interest rate risk is the most significant market risk impacting us.the Company. Interest rate risk occurs when interest rate sensitive assets and liabilities do not reprice simultaneously or at the same rate of interest and/or in equal volume.volumes. A key objective of our asset and liability management is to manage interest rate risk associated with changing asset and liability cash flows values of our assets and liabilities,values, and market interest rate movements. The management of our interest rate risk is governed by policies reviewed and approved annually by the Board of Directors of the Bank.Board. The Board delegates responsibility for interest rate risk management to the BRC and to the ALM, which is composed of the Bank’s senior executives and other designated officers.
The fundamental objective of ourthe ALM is to manage our exposure to interest rate fluctuations while maintaining adequate levels of liquidity and capital. The ALM meets regularly to monitor the interest rate risk, the sensitivity of our assets and liabilities to interest rate changes, the book and fairmarket values of assets and liabilities, and ourthe Company’s investment activities, andactivities. It also directs changes in the composition of our interest earning assets and interest bearing liabilities. The ALM reports at least quarterly toOverall, the ALCO. Our strategy has beenCompany aims to reduce the sensitivity of our earnings to interest rate fluctuations by more closely matching the effective maturities or repricing characteristics of our assets and liabilities.fluctuations. Certain assets and liabilities, however, may react in different degrees to changes in market interest rates. Further,Furthermore, interest rates on certain types of assets and liabilities may fluctuate prior to changes in market interest rates, while interest rates on other types of assets and liabilities may lag behind. We considerbehind changes in market interest rates. The expected maturities of various assets or liabilities may shorten or lengthen as interest rates change. Management considers the anticipated effects of these factors when implementing our interest rate risk management objectives.
Derivative Activity
As part of our asset and liability management strategy, we may enter into derivative financial instruments, such as interest rate swaps, risk participation agreements, foreign exchange contracts, caps, floors, collars, interest rate lock commitments, and forward sales commitments, with the overall goal of minimizing the impact of interest rate fluctuations on our net interest margin. Interest rate swaps and caps involve the exchange of fixed-rate and variable-rate interest payment obligations without the exchange of the underlying notional amounts.
Interest Rate Sensitivity
Our monitoring activities related to managing interest rate risk include both interest rate sensitivity “gap” analysis and the use of a simulation model. While traditional gap analysis provides a simple picture of the interest rate risk embedded in the statement of financial condition, it provides only a static view of interest rate sensitivity at a specific point in time and does not measure the potential volatility in forecasted results relating to changes in market interest rates over time. Accordingly, we combine the use of gap analysis with the use of a simulation model, which provides a dynamic assessment of interest rate sensitivity.
The interest rate sensitivity gap is defined as the difference between the amount of interest earning assets anticipated to reprice within a specific time period and the amount of interest bearing liabilities anticipated to reprice within that same time period. A gap is considered positive when the amount of interest rate sensitive assets repricing within a specific time period exceeds the amount of interest bearing liabilities repricing within that same time period. A positive cumulative gap suggests that earnings will increase when interest rates rise and decrease when interest rates fall. A negative cumulative gap suggests that earnings will increase when interest rates fall and decrease when interest rates rise. However, actual earnings may not increase or decrease as expected based on the cumulative gap as there are other factors that impact earnings.


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The following table illustrates our combined asset and liability contractual repricing as of December 31, 2017:2023:
0 - 3 Months0 - 3 MonthsOver 3 Months to
1 Year		Over 1 Year
to 5 Years		Over 5
Years		Total
(Dollars in thousands)
Rate Sensitive Assets:
Interest earning cash
Interest earning cash
Interest earning cash
 0 - 3 Months 
Over 3 Months to
1 Year
 
Over 1 Year
to 5 Years
 
Over 5
Years
 Total
Investment securities AFS
Investment securities AFS
Investment securities AFS
Investment securities HTM
Equity investments
Loans outstanding(1)
 (Dollars in thousands)
Rate Sensitive Assets          
Interest-bearing cash in other banks $306,473
 $—
 $—
 $—
 $306,473
Interest-bearing deposits in other financial
institutions and other investments
 19,220
 18,945
 15,201
 —
 53,366
Securities available for sale 4,475
 490
 735,912
 979,380
 1,720,257
Loans outstanding(1)
 4,298,142
 778,188
 5,353,259
 702,929
 11,132,518
FHLB stock 29,776
 —
 —
 —
 29,776
Total rate sensitive assets $4,658,086
 $797,623
 $6,104,372
 $1,682,309
 $13,242,390
Rate Sensitive Liabilities          
Time deposits 857,761
 2,998,205
 418,697
 —
 4,274,663
Total rate sensitive assets
Total rate sensitive assets
Rate Sensitive Liabilities:
Rate Sensitive Liabilities:
Rate Sensitive Liabilities:
Money market and NOW
Money market and NOW
Money market and NOW 3,332,703
 —
 —
 —
 3,332,703
Savings deposits 165,899
 39,484
 35,126
 —
 240,509
FHLB advances and federal funds purchased 364,900
 65,000
 797,693
 —
 1,227,593
Subordinated Debentures 100,853
 —
 —
 —
 100,853
Time deposits
FHLB and FRB borrowings
Convertible notes
Subordinated debentures
Total rate sensitive liabilities $4,822,116
 $3,102,689
 $1,251,516
 $—
 $9,176,321
          
Net Gap Position $(164,030) $(2,305,066) $4,852,856
 $1,682,309
  
Net Gap Position
Net Gap Position
Cumulative Gap Position $(164,030) $(2,469,096) $2,383,760
 $4,066,069
  
Cumulative Gap Position
Cumulative Gap Position
 ___________________
(1)Includes loans held for sale of $29.7 million.
The(1)Includes nonaccrual loans of $45.2 million and loans held for sale of $3.4 million.
Our simulation model discussed above provides our ALM with the ability to simulate our net interest income. In order to measure, at December 31, 2017, the sensitivity of our forecasted net interest income to changing interest rates, both rising and falling interest rate scenarios were projected and compared to base market interest rate forecasts. One application of our simulation model measures the impact of market interest rate changes on the net present value of estimated cash flows from our assets and liabilities, defined as our market value of equity. This analysis assesses the changes in market values of interest rate sensitive financial instruments that would occur in response to an instantaneous and sustained increase in market interest rates.
under various scenarios. Our net interest income and marketeconomic value of equity exposure related to these hypothetical changes in market interest rates are illustrated in the following table:
 December 31, 2023December 31, 2022
Simulated Rate ChangesEstimated Net
Interest Income
Sensitivity		Economic Value
Of Equity
Volatility		Estimated Net
Interest Income
Sensitivity		Economic Value
Of Equity
Volatility
 + 200 basis points3.30 %(11.94)%7.27 %(6.45)%
 + 100 basis points2.20 %(5.45)%3.71 %(2.84)%
 - 100 basis points(2.82)%2.47 %(3.20)%1.98 %
 - 200 basis points(5.49)%3.29 %(6.74)%2.25 %
 December 31, 2017 December 31, 2016
Simulated Rate Changes
Estimated Net
Interest Income
Sensitivity
 
Market Value
of Equity
Volatility
 
Estimated Net
Interest Income
Sensitivity
 
Market Value
of Equity
Volatility
+ 200 basis points2.18 %
(4.42)% 2.58 % (4.05)%
+ 100 basis points1.12 %
(2.08)% 1.15 % (1.91)%
- 100 basis points(2.22)%
1.00 % (0.60)% 1.41 %
- 200 basis points(8.56)%
0.60 % (9.66)% 0.42 %

The estimated sensitivity does not necessarily represent our forecast of future results and the estimated results may not be indicative of actual changes to our net interest income. These estimates areThe simulation results presented above for estimated net interest income sensitivity is based uponon a number12-month ramp scenario, using an adjusted balance sheet, the implied forward rate curve and a parallel shift of long and short-end interest rates off of base interest rates. The adjusted balance sheet at December 31, 2023, reflects noninterest bearing deposit migration into interest bearing deposits, assumptions including:related to early withdrawals or deposit attrition, and changes to loan prepayment speeds based on interest rate scenarios. The adjusted balance sheet does not reflect growth, or other asset or liability migration and attrition, that would occur in a dynamic environment of rising or falling interest rates or actions that we would take in response to such events. The adjusted balance sheet at December 31, 2022, reflects the naturesame assumptions, except those of noninterest bearing deposit migration into interest bearing deposits and time deposit early withdrawals. Year-over-year changes in interest rates and the composition of the balance sheet impacted the dollar amount of the base interest income, the replacement yields and rates for maturing assets and liabilities, and the deposit beta assumptions utilized in the simulation model. Future actual performance will be dependent on market conditions, the level of competition for deposits, and the magnitude and timing of interest rate levelsincreases or decreases.
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Another application of the simulation model measures the impact of market interest rate changes on the net present value of estimated cash flows from our assets and liabilities, defined as our economic value of equity (“EVE”). This analysis assesses the changes in the market values of our interest rate sensitive assets and liabilities that would occur in response to an instantaneous and sustained increase in market interest rates. The year-over-year EVE volatility at December 31, 2023, showed increased liability sensitivity largely attributable to higher balances of investment securities and an increase in receive-fixed rate/pay-float interest rate swaps executed in 2023.
Our models are driven by expected behavior in various interest rate scenarios and various factors besides market interest rates can affect our net interest income. As a result, model outputs could be materially different from actual results. For this reason, we model many different combinations of interest rates and balance sheet assumptions to understand our overall sensitivity to market interest rate changes, including shocks, ramps, yield curve shape, prepayment on loans and securities, pricing strategies on loans and deposits, and replacementflattening, yield curve steepening, as well as forecasts of asset and liability cash flows. While the assumptions used are based on current economic and local market conditions, there is no assurance as to the predictive nature of these conditions including how customer preferences or competitor influences may change. likely interest rate scenarios tested.
The ALCO,Board Risk Committee, which oversees our interest rate risk management, has established the exposure limits for acceptable changes in net interest income and market value of equity related to these hypothetical changes in market interest rates. Given the limitations of the analyses,analysis, management believes that these hypothetical changes are considered tolerable and manageable as of December 31, 2017.2023.

LIBORTransition
The Company had financial instruments that were indexed to LIBOR including investment securities, loans, derivatives, subordinated debentures, and other financial contracts prior to June 30, 2023. Since January 1, 2022, we ceased to originate any LIBOR based financial instruments. We have completed our efforts to modify financial instruments tied to LIBOR by establishing an alternative benchmark rate. The transition away from LIBOR did not have a material impact on the Company’s consolidated financial statements. For additional information about our associated risks, please refer to Item 1A, Risk Factors.

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Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Consolidated Financial Statements of Hope Bancorp, together with the reports thereonreport of Crowe Horwath, LLP and BDO USA, LLP begin on page F-1 of this Report and are incorporated herein by reference:
ReportsReport of Independent Registered Public Accounting FirmsFirm (PCAOB ID 173)
Consolidated Statements of Financial Condition as of December 31, 20172023 and 20162022
Consolidated Statements of Income for the Years Ended December 31, 2017, 20162023, 2022 and 20152021
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2017, 20162023, 2022 and 20152021
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2017, 20162023, 2022 and 20152021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 20162023, 2022 and 20152021
Notes to Consolidated Financial Statements for the Years Ended December 31, 2017, 20162023, 2022 and 20152021
See ““Item 15. Exhibits and Financial Statement Schedules”Schedules” for exhibits filed as a part of this Report.
The supplementary data required by this Item (selected quarterly financial data) is provided in Note 2123 “Quarterly Financial Data (unaudited)” in the Notes to the Consolidated Financial Statements.


Item 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Item 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.



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Item 9A.CONTROLS AND PROCEDURES
Item 9A.CONTROLS AND PROCEDURES
a.Evaluation of Disclosure Controls and Procedures
a.     Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chairman, President, and Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.disclosures.
In designing and evaluating disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
We conducted an evaluation under the supervision and with the participation of our management, including our Chairman, President, and Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of December 31, 2017.2023. Based upon that evaluation, our Chairman, President, and Chief Executive Officer and our Chief Financial Officer determined that our disclosure controls and procedures were effective as of December 31, 2017.2023.
b.     Management’s Annual Report on Internal Control Over Financial Reporting
The management of Hope Bancorp, Inc. (the “Company”)the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company as defined in Rule 13a-15(f) under the Exchange Act. This system, which our management has chosen to base on the framework set forth in the 2013 Internal Control-Integrated Framework, published by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), is supervised by our Chairman, President, and Chief Executive Officer and Chief Financial Officer, and is effected by the Company’s board of directors,Board, management and other personnel, and is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and the directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Further, because of changes in conditions, effectiveness of internal controls over financial reporting may vary over time.
With the participation of our Chairman, President, and Chief Executive Officer and our Chief Financial Officer, and under the direction of our audit committee, our management has conducted an assessment of the effectiveness of the Company’s system of internal control over financial reporting as of December 31, 20172023, using the criteria set forth by COSO. Based on this assessment, our management believes that the Company’s system of internal control over financial reporting was effective as of December 31, 2017.2023.
Our independent registered public accounting firm has issued an attestation report on our internal control over financial reporting which is included below inon page F-1 of this section.
Remediation of Prior Year Material Weaknesses
As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the SEC on May 18, 2017, management conducted an assessment of the effectiveness of the system of internal control over financial reporting as of December 31, 2016. Based on that assessment, management determined that, as of December 31, 2016, the Company's system of internal control over financial reporting was not effective because of the material weaknesses that were identified and summarized in our Annual Report on Form 10-K for the year ended December 31, 2016. In an effort to remediate the material weaknesses, management, with the oversight of the audit committee, took steps in 2017 that we believe remediated the material weaknesses identified as of December 31, 2016. The Company’s remediation efforts and internal control enhancements relate to, but were not limited to, the following:

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Internal control over financial reporting related to the review process for the allowance for loan losses was enhanced by strengthening the review and approval process of the allowance for loan losses components, in particular the qualitative adjustment factors. The controls were also enhanced to include a detailed review of the allowance for loan losses by the Company’s Management Allowance Committee;
Internal control over financial reporting and documentation related to the review process for impaired loans on accrual status and the allowance for loan losses calculation was enhanced through an additional layer of monitoring and review. The Company also enhanced its policies and procedures so that impaired loans on accrual status are reviewed to ensure that the principal and interest is expected to be recovered;
Internal control over financial reporting related to the review of the consolidated financial statements, including the consolidated statement cash flows, was enhanced to ensure that multiple layers of detailed reviews are performed to prevent potential errors in the consolidated statement of cash flows; and
The Company hired additional staff, including a SOX Compliance Manager and two additional SOX Compliance Officers, who are part of the Company’s newly established SOX Compliance Department. The Company also enhanced its SOX Compliance Program in 2017 and formed a SOX Steering Committee to oversee the execution of the Company’s SOX Compliance Program.
Additionally, some of the material weaknesses identified as of December 31, 2016 were related to business combinations, however, the Company has had no such activity as of December 31, 2017. Although the controls related to business combinations have not been tested for remediation, management assessed, as of December 31, 2017, the severity of the deficiencies related to business combinations and the maximum potential impact to our consolidated financial statements (in accordance with Auditing Standard 2201). Based on this assessment, management concluded that no material weakness existed as of December 31, 2017 related to business combinations. The Company had no identified material weaknesses as of December 31, 2017.

report.
c.     Changes in Internal Control Over Financial Reporting
Management has determined that there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended December 31, 20172023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As of December 31, 2017, our management completed its remediation of the material weaknesses identified and summarized in our Annual Report on Form 10-K for the year ended December 31, 2016, and as part of our remediation efforts, the Company made enhancements to our internal control over financial reporting as noted above. However, these changes did not constitute a change in the Company’s internal control over financial reporting.


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Report of Independent Registered Public Accounting Firm

Our independent registered public accounting firm has issued an audit report on our internal control over financial reporting which is included on page F-1 of this report.


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TableItem 9B.OTHER INFORMATION
During the three months ended December 31, 2023, no director or officer of Contentsthe Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as defined in Item 408 of Regulation S-K.




Item 9B.OTHER INFORMATION
Item 9C.    DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.

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PART III
Item 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this Item with respect to the Company’s directors and executive officers, Delinquent Section 16(a) beneficial ownership reporting compliance,Reports, the Company’s Code of Ethics and Business Conduct, director nomination procedures, the Audit Committee and the audit committee financial expert will be filed in Hope Bancorp’s definitive Proxy Statement for its 20182024 Annual Meeting of Stockholders (the “2018“2024 Proxy Statement”), which will be filed with the SEC not later than 120 days after December 31, 2017. 2023.
 The Company has adopted a code of ethics that applies to all employees, including its principal executive officer, principal financial officer and principal accounting officer. The employee code of ethics is accessible on the “Governance Documents” page of the “Corporate Governance” tab of our investor relations website at www.ir-hopebancorp.com.
Item 11.EXECUTIVE COMPENSATION
Item 11.EXECUTIVE COMPENSATION
The information required by this Item with respect to director and executive compensation, “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” will be filed in Hope Bancorp’s 20182024 Proxy Statement which will be filed with the SEC not later than 120 days after December 31, 2017.2023.
Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The information required by this Item with respect to security ownership of certain beneficial owners and management will be filed in Hope Bancorp’s 20182024 Proxy Statement which will be filed with the SEC not later than 120 days after December 31, 2017.2023. 
The following table summarizes our equity compensation plans as of December 31, 2017:2023:
Securities Authorized for Issuance Under Equity Compensation Plans
Plan CategoryNumber of securities to be issued upon exercise
of outstanding options,
warrants and rights
(a)		Weighted average
exercise price of
outstanding options,
warrants and rights
(b)		Number of securities
remaining available for
future issuance under
equity compensation
plans excluding
securities reflected in
Column (a)
(c)
Equity compensation plans approved by security holders629,367 $16.61 121,962 
Equity compensation plans not approved by security holders— — 150,000 
Total629,367 $16.61 271,962 
Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Plan Category
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)
 
Weighted average
exercise price of
outstanding options,
warrants and rights
(b)
 
Number of securities
remaining available for
future issuance under
equity compensation
plans excluding
securities reflected in
Column (a)
(c)
Equity compensation plans approved by security holders1,075,423
 $15.06
 1,341,621
Equity compensation plans not approved by security holders—
 —
 —
Total1,075,423
 $15.06
 1,341,621
Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item with respect to certain relationships and related transactions and director independence will be filed in Hope Bancorp’s 20182024 Proxy Statement which will be filed with the SEC not later than 120 days after December 31, 2017.2023. 
Item 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES
Item 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item with respect to principal accountant fees and services will be filed in Hope Bancorp’s 20182024 Proxy Statement which will be filed with the SEC not later than 120 days after December 31, 2017.2023. 

69

63

PART IV
Item 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Item 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements: The financial statements listed under Part II-Item 8. “Financial Statements and Supplementary Data” are filed as part of this Annual Report on Form 10-K.
(a)(2) Financial Statement Schedules: All financial statement schedules have been omitted since the required information is either not applicable or not required, or has been included in the Financial Statements and related notes.
(a)(3) List of Exhibits
 
NumberDescription
Number3.1Description
AgreementAmended and Plan of Merger, dated as of December 7, 2015, between BBCN Bancorp, Inc. and Wilshire Bancorp, Inc. (incorporated herein by reference to the Current Report on Form 8-K, Exhibit 2.1, filed with the SEC on December 7, 2015)
2.2
Agreement and Plan of Merger, dated as of January 23, 2017, by and between Hope Bancorp, Inc. and U & I Financial Corp. (incorporated herein by reference to the Current Report on Form 8-K, Exhibit 2.1, filed with the SEC on January 24, 2017)
3.1
Restated Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on June 5, 2000 (incorporated herein by reference to Appendix III to the prospectus included in the Registration Statement on Form S-4 filed with the SEC on November 16, 2000)
3.2
Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on May 31, 2002 (incorporated herein by reference to the Registration Statement on Form S-8, Exhibit 3.3, filed with the SEC on February 5, 2003)
3.3
Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on June 1, 2004 (incorporated herein by reference to the Quarterly Report on Form 10-Q, Exhibit 3.1, filed with the SEC on August 9, 2004)
3.4
Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on November 2, 2005 (incorporated herein by reference to the Quarterly Report on Form 10-Q, Appendix B, filed with the SEC on November 9, 2005)
3.5
Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on July 20, 2007 (incorporated herein by reference to the Proxy Statement on Schedule 14A, Appendix C, filed with the SEC on April 19, 2007)
3.6
Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on November 30, 2011Hope Bancorp, Inc. (incorporated herein by reference to the Annual Report on Form 10-K, Exhibit 3.6,3.1, for the year ended December 31, 2022, filed with the SEC on March 1, 2013)February 28, 2023)
3.7
3.2
3.8
Certificate of Amendment of Bylaws of Hope Bancorp, Inc. (incorporated herein by reference to the CurrentAnnual Report on Form 8-K,10-K, Exhibit 3.2, for the year ended December 31, 2022, filed with the SEC on August 1, 2016)February 28, 2023)
4.1
4.2

64

4.3
NumberDescription
Indenture, dated December 22, 2003, between Nara Bancorp, Inc. as Issuer and Wells Fargo Bank, National Association as Trustee (incorporated herein by reference to the Current Report on Form 8-K/A, Exhibit 99.8, filed with the SEC on May 2, 2008)
4.4
4.5
4.6
4.7
4.8
4.9
4.10
70


NumberDescription
4.11
10.1
10.2
10.3
10.4
10.5
10.2
10.6
10.3
10.7
10.4
Affiliate Agreement between Nara Bancorp and Nara Bank, N.A. (incorporated herein by reference to the Annual Report on Form 10-K, Exhibit 10.12,10.7, for the year ended December 31, 2001,2022, filed with the SEC on February 28, 2023)*
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
71


NumberDescription
10.16
10.17
10.6
10.18
10.7
10.19
10.8
10.20
10.9
21.1
10.10
Bank of Hope 2017 Employee Stock Purchase Program (incorporated herein by reference to the 10-Q filed with the SEC on November 8, 2017)+

65

NumberDescription
11.1
Statement regarding Computation of Per Share Earnings (Footnote 18 in the Notes to the Consolidated Financial Statements)*
12.1
Statement regarding computation of Ratios of Earnings to Fixed Charges*
14.1
Director Code of Ethics and Business Conduct*
14.2
Code of Ethics and Business Conduct*
21.1
Subsidiaries of the Registrant*Registrant+
23.1
23.2
31.1
31.1
Certification of Chief Executive Officer pursuant to section 302 of Sarbanes-Oxley of 2002*2002+
31.2
32.1
32.2
97
101.INSInline XBRL Instance Document*Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document+
101.SCHInline XBRL Taxonomy Extension Schema Document*Document+
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document*Document+
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document*Document+
101.LABInline XBRL Taxonomy Extension Label Linkbase Document*Document+
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document*Document+
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
________________
*Filed herewith
**Furnished herewith
+Management contract or compensatory plan or arrangement

_______________________

*     Management contract, compensatory plan, or arrangement
+     Filed herewith
++    Furnished herewith
72


Item 16.    FORM 10-K SUMMARY
None



66
73


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: March 1, 2018
HOPE BANCORP, INC.
By:/s/    KEVIN S. KIM
Kevin S. Kim
President and Chief Executive Officer

67

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.
Signature/NameTitleDate
By:/S/    KEVIN S. KIM  President and Chief Executive OfficerMarch 1, 2018
Kevin S. Kim(Principal Executive Officer)
By:/S/    ALEX KOExecutive Vice President & Chief Financial OfficerMarch 1, 2018
Alex Ko(Principal Financial and Accounting Officer)
By:/S/  SCOTT YOON-SUK WHANGChairmanMarch 1, 2018
Scott Yoon-Suk Whang
By:/S/    STEVEN S. KOHDirectorMarch 1, 2018
Steven S. Koh
By:/S/    DONALD D. BYUNDirectorMarch 1, 2018
Donald D. Byun
By:/S/    STEVEN J. DIDIONDirectorMarch 1, 2018
Steven J. Didion
By:/S/    JINHO DOODirectorMarch 1, 2018
Jinho Doo
By:/S/    DAISY HADirectorMarch 1, 2018
Daisy Ha
By:/S/    JIN CHUL JHUNGDirectorMarch 1, 2018
Jin Chul Jhung
By:/S/    CHUNG HYUN LEEDirectorMarch 1, 2018
Chung Hyun Lee
By:/S/    WILLIAM J. LEWISDirectorMarch 1, 2018
William J. Lewis
By:/S/    DAVID P. MALONEDirectorMarch 1, 2018
David P. Malone
By:/S/    JOHN R. TAYLORDirectorMarch 1, 2018
John R. Taylor
By:/S/    DALE S. ZUEHLSDirectorMarch 1, 2018
Dale S. Zuehls

68


Report of Independent Registered Public Accounting Firm


Shareholders and the Board of Directors of Hope Bancorp, Inc.
Los Angeles, California

OpinionsOur independent registered public accounting firm has issued an audit report on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statement of financial condition of Hope Bancorp, Inc. (the "Company") as of December 31, 2017, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’sour internal control over financial reporting which is included on page F-1 of this report.


Item 9B.OTHER INFORMATION
During the three months ended December 31, 2023, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as defined in Item 408 of Regulation S-K.


Item 9C.    DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
68


PART III
Item 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this Item with respect to the Company’s directors and executive officers, Delinquent Section 16(a) Reports, the Company’s Code of Ethics and Business Conduct, director nomination procedures, the Audit Committee and the audit committee financial expert will be filed in Hope Bancorp’s definitive Proxy Statement for its 2024 Annual Meeting of Stockholders (the “2024 Proxy Statement”), which will be filed with the SEC not later than 120 days after December 31, 2023.
 The Company has adopted a code of ethics that applies to all employees, including its principal executive officer, principal financial officer and principal accounting officer. The employee code of ethics is accessible on the “Governance Documents” page of the “Corporate Governance” tab of our investor relations website at www.ir-hopebancorp.com.
Item 11.EXECUTIVE COMPENSATION
The information required by this Item with respect to director and executive compensation, “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” will be filed in Hope Bancorp’s 2024 Proxy Statement which will be filed with the SEC not later than 120 days after December 31, 2023.
Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The information required by this Item with respect to security ownership of certain beneficial owners and management will be filed in Hope Bancorp’s 2024 Proxy Statement which will be filed with the SEC not later than 120 days after December 31, 2023. 
The following table summarizes our equity compensation plans as of December 31, 2017, based on criteria established2023:
Securities Authorized for Issuance Under Equity Compensation Plans
Plan CategoryNumber of securities to be issued upon exercise
of outstanding options,
warrants and rights
(a)		Weighted average
exercise price of
outstanding options,
warrants and rights
(b)		Number of securities
remaining available for
future issuance under
equity compensation
plans excluding
securities reflected in
Column (a)
(c)
Equity compensation plans approved by security holders629,367 $16.61 121,962 
Equity compensation plans not approved by security holders— — 150,000 
Total629,367 $16.61 271,962 
Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item with respect to certain relationships and related transactions and director independence will be filed in Internal Control - Integrated Framework: (2013) issuedHope Bancorp’s 2024 Proxy Statement which will be filed with the SEC not later than 120 days after December 31, 2023. 
Item 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item with respect to principal accountant fees and services will be filed in Hope Bancorp’s 2024 Proxy Statement which will be filed with the Committee of Sponsoring Organizations of the Treadway Commission (COSO).SEC not later than 120 days after December 31, 2023. 

69
In our opinion, the

PART IV
Item 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements: The financial statements referred to above present fairly, in all material respects,listed under Part II-Item 8. “Financial Statements and Supplementary Data” are filed as part of this Annual Report on Form 10-K.
(a)(2) Financial Statement Schedules: All financial statement schedules have been omitted since the financial position of the Company as of December 31, 2017, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework: (2013) issued by COSO.

Basis for Opinions
The Company’s managementrequired information is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,either not applicable or not required, or has been included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s financial statementsStatements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulationsrelated notes.
(a)(3) List of the Securities and Exchange Commission and the PCAOB.Exhibits

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.


NumberDescription
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
F-1
70




Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We have served as the Company's auditor since 2017.

Los Angeles, California
March 1, 2018

NumberDescription
4.11
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
F-2
71




NumberDescription
10.16
10.17
10.18
10.19
10.20
21.1
23.1
31.1
31.2
32.1
32.2
97
101.INSInline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document+
101.SCHInline XBRL Taxonomy Extension Schema Document+
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document+
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document+
101.LABInline XBRL Taxonomy Extension Label Linkbase Document+
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document+
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
_______________________
*     Management contract, compensatory plan, or arrangement
+     Filed herewith
++    Furnished herewith
72


Item 16.    FORM 10-K SUMMARY
None

73


Report of Independent Registered Public Accounting Firm

Our independent registered public accounting firm has issued an audit report on our internal control over financial reporting which is included on page F-1 of this report.


Item 9B.OTHER INFORMATION
During the three months ended December 31, 2023, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as defined in Item 408 of Regulation S-K.


Item 9C.    DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
68


PART III
Item 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this Item with respect to the Company’s directors and executive officers, Delinquent Section 16(a) Reports, the Company’s Code of Ethics and Business Conduct, director nomination procedures, the Audit Committee and the audit committee financial expert will be filed in Hope Bancorp’s definitive Proxy Statement for its 2024 Annual Meeting of Stockholders (the “2024 Proxy Statement”), which will be filed with the SEC not later than 120 days after December 31, 2023.
 The Company has adopted a code of ethics that applies to all employees, including its principal executive officer, principal financial officer and principal accounting officer. The employee code of ethics is accessible on the “Governance Documents” page of the “Corporate Governance” tab of our investor relations website at www.ir-hopebancorp.com.
Item 11.EXECUTIVE COMPENSATION
The information required by this Item with respect to director and executive compensation, “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” will be filed in Hope Bancorp’s 2024 Proxy Statement which will be filed with the SEC not later than 120 days after December 31, 2023.
Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The information required by this Item with respect to security ownership of certain beneficial owners and management will be filed in Hope Bancorp’s 2024 Proxy Statement which will be filed with the SEC not later than 120 days after December 31, 2023. 
The following table summarizes our equity compensation plans as of December 31, 2023:
Securities Authorized for Issuance Under Equity Compensation Plans
Plan CategoryNumber of securities to be issued upon exercise
of outstanding options,
warrants and rights
(a)		Weighted average
exercise price of
outstanding options,
warrants and rights
(b)		Number of securities
remaining available for
future issuance under
equity compensation
plans excluding
securities reflected in
Column (a)
(c)
Equity compensation plans approved by security holders629,367 $16.61 121,962 
Equity compensation plans not approved by security holders— — 150,000 
Total629,367 $16.61 271,962 
Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item with respect to certain relationships and related transactions and director independence will be filed in Hope Bancorp’s 2024 Proxy Statement which will be filed with the SEC not later than 120 days after December 31, 2023. 
Item 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item with respect to principal accountant fees and services will be filed in Hope Bancorp’s 2024 Proxy Statement which will be filed with the SEC not later than 120 days after December 31, 2023. 
69


PART IV
Item 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements: The financial statements listed under Part II-Item 8. “Financial Statements and Supplementary Data” are filed as part of this Annual Report on Form 10-K.
(a)(2) Financial Statement Schedules: All financial statement schedules have been omitted since the required information is either not applicable or not required, or has been included in the Financial Statements and related notes.
(a)(3) List of Exhibits
NumberDescription
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
70


NumberDescription
4.11
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
71


NumberDescription
10.16
10.17
10.18
10.19
10.20
21.1
23.1
31.1
31.2
32.1
32.2
97
101.INSInline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document+
101.SCHInline XBRL Taxonomy Extension Schema Document+
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document+
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document+
101.LABInline XBRL Taxonomy Extension Label Linkbase Document+
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document+
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
_______________________
*     Management contract, compensatory plan, or arrangement
+     Filed herewith
++    Furnished herewith
72


Item 16.    FORM 10-K SUMMARY
None

73


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
HOPE BANCORP, INC.
Date:February 28, 2024/s/ Kevin S. Kim
Kevin S. Kim
Chairman, President, and Chief Executive Officer

74


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.
Signature/NameTitleDate
By:/s/  KEVIN S. KIM  Chairman, President, and Chief Executive OfficerFebruary 28, 2024
      Kevin S. Kim(Principal Executive Officer)
By:/s/  JULIANNA BALICKAExecutive Vice President and Chief Financial OfficerFebruary 28, 2024
      Julianna Balicka(Principal Financial and Accounting Officer)
By:/s/  DONALD D. BYUNDirectorFebruary 28, 2024
      Donald D. Byun
By:/s/  JINHO DOODirectorFebruary 28, 2024
      Jinho Doo
By:/s/  DAISY Y. HADirectorFebruary 28, 2024
      Daisy Y. Ha
By:/s/  JOON KYUNG KIMDirectorFebruary 28, 2024
      Joon Kyung Kim
By:/s/  STEVEN S. KOHDirectorFebruary 28, 2024
      Steven S. Koh
By:/s/  WILLIAM J. LEWISDirectorFebruary 28, 2024
      William J. Lewis
By:/s/  DAVID P. MALONEDirectorFebruary 28, 2024
      David P. Malone
By:/s/  LISA K. PAIDirectorFebruary 28, 2024
      Lisa K. Pai
By:/s/  MARY E. THIGPENDirectorFebruary 28, 2024
      Mary E. Thigpen
By:/s/  SCOTT YOON-SUK WHANGDirectorFebruary 28, 2024
      Scott Yoon-Suk Whang
By:/s/  DALE S. ZUEHLSDirectorFebruary 28, 2024
      Dale S. Zuehls
75



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and the Board of Directors and Stockholders Hope
of Hope Bancorp, Inc.
Los Angeles, California



Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheetsstatements of financial condition of Hope Bancorp, Inc. and subsidiaries(the “Company”) as of December 31, 20162023 and 2022, the related consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the two years in the three-year period ended December 31, 2016. These2023, and the related notes (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements arereferred to above present fairly, in all material respects, the responsibilityfinancial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO.
Basis for Opinions
The Company’s management.management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on thesethe Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the auditaudits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesmisstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinion.opinions.
In
F-1


Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, referredtaken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to above present fairly,which they relate.
Allowance and Provision for Credit Losses – Loans Carried at Amortized Cost
Refer to Notes 1 and 4 to the Consolidated Financial Statements
The Company accounts for credit losses under Financial Accounting Standards Board Accounting Standards Codification No. 326, Financial Instruments – Credit Losses, which requires the Company to estimate expected credit losses for its financial assets carried at amortized cost utilizing the current expected credit loss (“CECL”) methodology.
The allowance for credit losses (“ACL”) under the CECL methodology was a significant estimate recorded within the Company’s financial statements with a reported balance of $158.7 million as of December 31, 2023; $156.0 million, or approximately 98% of the ACL was estimated on a collective basis utilizing reasonable and supportable forecasts, current conditions, and historical loss experience. The Company utilized models to estimate probability of default (“PD”) and loss given default (“LGD”) rates to estimate the estimated loss of its largest loan portfolio segment – commercial real estate (“CRE”) loans. The modeled ACL represented a significant component of this portion of the Company’s ACL estimate.
The principal consideration for our determination that auditing the CRE-modeled component of the ACL estimate is a critical audit matter is due to the level of audit effort required for certain aspects of the modeling process. The Company’s CECL modeling process is multifaceted and involves a significant amount of effort and management judgment, which in all material respects,turn involved our especially complex and subjective judgment.
A number of management judgments and assumptions are required during the financial positionmodeling process for CRE loans assessed on a collective basis, such as the selection of Hope Bancorp, Inc.economic forecast scenarios to adjust PD and subsidiariesLGD rates. Management’s identification and analysis of these judgments and assumptions requires significant judgment, which in turn involved especially complex and subjective auditor judgment when evaluating such judgments and assumptions.
To address these matters, we tested the design and operating effectiveness of the Company’s controls related to management judgments and assumptions within the modeling process including, but not limited to:
•Management’s model validation, conducted by the Company’s Model Risk Management Department, which includes an evaluation of the reasonableness and sensitivity of significant management judgments and assumptions
•Management’s review of the reasonableness and sensitivity of significant judgments and assumptions
•Management’s review of the directional consistency of judgments and assumptions with modeled or estimate results


F-2



Our principal substantive audit procedures related to the management judgments and assumptions included, but were not limited to:
•Evaluation of the sensitivity of significant judgments and assumptions
•Evaluation of the reasonableness of management’s judgments and assumptions within the Company’s ACL methodology and framework
Goodwill Impairment Evaluation
Refer to Notes 1 and 5 to the Consolidated Financial Statements
The Company’s consolidated goodwill balance was $464.5 million at December 31, 20162023, which is allocated to the Company’s single reporting unit. The Company tests for impairment at least annually or if an event occurs or circumstances change that indicate that the fair value of the reporting unit may be below its carrying amount (triggering event).
The Company determined that a triggering event occurred and 2015,performed a quantitative assessment of goodwill for the Company’s single reporting unit as of June 30 and September 30, 2023, utilizing a discounted cash flow analysis (“income approach”), guideline public company method (“market approach”) and/or combination of both.The Company assessed qualitative factors related to goodwill as of December 31, 2023, and determined a Step 1 fair value assessment was not required. Based on the assessments, the Company determined that goodwill was not impaired at the respective assessment dates. The determination of the fair value of the reporting unit requires significant estimates and subjective assumptions which require a high degree of management judgment.
We identified the June 30 and September 30, 2023, interim quantitative goodwill impairment assessments of the Company as a critical audit matter. The principal considerations for this determination were the degree of audit effort, including specialized skills and knowledge, and auditor judgment in performing procedures over the selection of valuation method(s) and significant assumptions applied in the valuation method(s), such as discount rate,long-term growth rate, capital requirements,and prospective financial information.
To address this matter, we tested the design and effectiveness of the Company’s controls including, but not limited to:
•Management’s review of the reasonableness of the Company’s prospective financial information utilized in the assessment, including the reasonableness of the internally developed forecast from which the prospective financial information was derived.
•Management’s evaluation of significant assumptions, including discount rate, long-term growth rate and capital requirements.
•Management’s evaluation of the selection of valuation method(s) and sensitivity of fair value under alternative methods.
Our principal substantive audit procedures related to this matter included, but were not limited to:
•Evaluation of the reasonableness of the Company’s prospective financial information utilized in the assessment, including the reasonableness of the internally developed forecast from which the prospective financial information was derived.
•Evaluation of the reasonableness of significant assumptions, including discount rate, long-term growth rate and capital requirements. Internal specialists assisted in the evaluation.
•Evaluation of the appropriateness of valuation methodologies and the results of their operations and their cash flows for eachsensitivity of the two yearsfair value when considering alternative methods. Internal specialists assisted in the period ended December 31, 2016, in conformity with accounting principles generally accepted inevaluation.
/s/ Crowe LLP
     Crowe LLP

We have served as the United States of America.Company's auditor since 2017.

/s/ BDO USA, LLP
Los Angeles, California
May 17, 2017February 28, 2024







F-3



HOPE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 20172023 AND 20162022

December 31,
2017 2016
(Dollars in thousands, except share data)
December 31,December 31,
202320232022
ASSETS ASSETS(Dollars in thousands, except share data)
Cash and cash equivalents:   
Cash and due from banks$185,527
 $168,827
Interest-bearing cash in other banks306,473
 268,507
Cash and due from banks
Cash and due from banks
Interest earning cash in other banks
Total cash and cash equivalents492,000
 437,334
Interest-bearing deposits in other financial institutions and other investments53,366
 44,202
Securities available for sale, at fair value1,720,257
 1,556,740
Loans held for sale, at the lower of cost or fair value29,661
 22,785
Loans receivable (net of allowance for loan losses of $84,541 and $79,343 at
December 31, 2017 and December 31, 2016, respectively)
11,018,034
 10,463,989
Total cash and cash equivalents
Total cash and cash equivalents
Interest earning deposits in other financial institutions
Investment securities available for sale (“AFS”), at fair value
Investment securities held to maturity (“HTM”), at amortized cost; fair value of $250,518 and $258,407 at December 31, 2023 and December 31, 2022, respectively
Equity investments
Loans held for sale, at lower of cost or fair value
Loans receivable, net of allowance for credit losses of $158,694 and $162,359 at December 31, 2023 and December 31, 2022, respectively
Other real estate owned (“OREO”), net10,787
 21,990
Federal Home Loan Bank (“FHLB”) stock, at cost29,776
 21,964
Premises and equipment, net56,714
 55,316
Accrued interest receivable29,979
 26,880
Deferred tax assets, net55,203
 88,110
Customers’ liabilities on acceptances1,691
 2,899
Bank owned life insurance (“BOLI”)74,915
 73,696
Investments in affordable housing partnerships81,009
 70,059
Operating lease right-of-use (“ROU”) assets, net
Goodwill464,450
 462,997
Core deposit intangible assets, net16,523
 19,226
Servicing assets24,710
 26,457
Servicing assets, net
Other assets47,642
 46,778
Total assets$14,206,717
 $13,441,422
   
See accompanying notes to consolidated financial statements.



F-4




HOPE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (continued)
DECEMBER 31, 2023 AND 2022
December 31,
20232022
LIABILITIES AND STOCKHOLDERS’ EQUITY(Dollars in thousands, except share data)
LIABILITIES:
Deposits:
Noninterest bearing$3,914,967 $4,849,493 
Interest bearing:
Money market and NOW accounts4,169,543 5,615,784 
Savings deposits702,486 283,464 
Time deposits5,966,757 4,990,060 
Total deposits14,753,753 15,738,801 
FHLB and Federal Reserve Bank (“FRB”) borrowings1,795,726 865,000 
Convertible notes, net444 217,148 
Subordinated debentures, net107,825 106,565 
Accrued interest payable168,174 26,668 
Acceptances outstanding471 818 
Operating lease liabilities52,670 59,088 
Commitments to fund investments in affordable housing partnerships21,017 11,792 
Other liabilities110,199 119,283 
Total liabilities$17,010,279 $17,145,163 
Commitments and contingent liabilities (Note 14)
STOCKHOLDERS’ EQUITY:
Common stock, $0.001 par value; 150,000,000 authorized shares at December 31, 2023 and December 31, 2022; issued and outstanding 137,509,621 and 120,126,786 shares, respectively, at December 31, 2023, and issued and outstanding 136,878,044 and 119,495,209 shares, respectively, at December 31, 2022$138 $137 
Additional paid-in capital1,439,963 1,431,003 
Retained earnings1,150,547 1,083,712 
Treasury stock, at cost; 17,382,835 shares at December 31, 2023 and December 31, 2022(264,667)(264,667)
Accumulated other comprehensive loss, net(204,738)(230,857)
Total stockholders’ equity2,121,243 2,019,328 
Total liabilities and stockholders’ equity$19,131,522 $19,164,491 
See accompanying notes to consolidated financial statements

F-5

HOPE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (continued)
DECEMBER 31, 2017 AND 2016

 December 31,
 2017 2016
 (Dollars in thousands, except share data)
LIABILITIES AND STOCKHOLDERS’ EQUITY 
LIABILITIES:   
Deposits:   
Noninterest bearing$2,998,734
 $2,900,241
Interest bearing:   
Money market and NOW accounts3,332,703
 3,401,446
Savings deposits240,509
 301,906
Time deposits of more than $250,0001,279,108
 1,077,024
Other time deposits2,995,555
 2,961,418
Total deposits10,846,609
 10,642,035
FHLB advances1,157,693
 754,290
Federal funds purchased69,900
 —
Subordinated debentures100,853
 99,808
Accrued interest payable15,961
 10,863
Acceptances outstanding1,691
 2,899
Commitments to fund investments in affordable housing partnerships38,467
 24,409
Other liabilities47,288
 51,645
Total liabilities12,278,462
 11,585,949
STOCKHOLDERS’ EQUITY:   
Common stock, $0.001 par value; authorized 150,000,000 shares at December 31, 2017 and December 31, 2016; issued and outstanding, 135,511,891 and 135,240,079 shares at December 31, 2017 and December 31, 2016, respectively136
 135
Additional paid-in capital1,405,014
 1,400,490
Retained earnings544,886
 469,505
Accumulated other comprehensive loss, net(21,781) (14,657)
Total stockholders’ equity1,928,255
 1,855,473
Total liabilities and stockholders’ equity$14,206,717
 $13,441,422


HOPE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2023, 2022, AND 2021
Year Ended December 31,
202320222021
(Dollars in thousands, except per share data)
INTEREST INCOME:
Interest and fees on loans$892,563 $660,732 $528,174 
Interest on investment securities66,063 52,220 35,492 
Interest on cash and deposits at other banks87,361 1,295 1,302 
Interest on other investments2,891 1,868 1,564 
Total interest income1,048,878 716,115 566,532 
INTEREST EXPENSE:
Interest on deposits441,231 114,839 42,011 
Interest on FHLB and FRB borrowings69,365 11,525 2,561 
Interest on other borrowings and debt12,421 11,330 9,190 
Total interest expense523,017 137,694 53,762 
NET INTEREST INCOME BEFORE PROVISION (CREDIT) FOR CREDIT LOSSES525,861 578,421 512,770 
PROVISION (CREDIT) FOR CREDIT LOSSES29,100 9,600 (12,200)
NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR CREDIT LOSSES496,761 568,821 524,970 
NONINTEREST INCOME:
Service fees on deposit accounts9,466 8,938 7,275 
International service fees3,365 3,134 3,586 
Wire transfer fees3,322 3,477 3,519 
Swap fees711 2,605 1,458 
Net gains on sales of SBA loans4,097 16,343 8,448 
Net gains on sales of residential mortgage loans290 882 4,435 
Other income and fees24,326 16,018 14,873 
Total noninterest income45,577 51,397 43,594 
NONINTEREST EXPENSE:
Salaries and employee benefits207,871 204,719 175,151 
Occupancy28,868 28,267 28,898 
Furniture and equipment21,378 19,434 18,079 
Data processing and communications11,606 10,683 10,331 
Professional fees6,464 6,314 12,168 
Amortization of investments in affordable housing partnerships8,195 8,742 11,067 
FDIC assessments13,296 6,248 5,109 
FDIC special assessment3,971 — — 
Earned interest credit22,399 10,998 1,842 
Software impairment— — 2,146 
Restructuring costs11,576 — — 
Other noninterest expense28,827 28,765 28,501 
Total noninterest expense364,451 324,170 293,292 
INCOME BEFORE INCOME TAXES177,887 296,048 275,272 
INCOME TAX PROVISION44,214 77,771 70,700 
NET INCOME$133,673 $218,277 $204,572 
Basic earnings per common share$1.11 $1.82 $1.67 
Diluted earnings per common share$1.11 $1.81 $1.66 
See accompanying notes to consolidated financial statements
F-6


HOPE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31, 2023, 2022, AND 2021
Year Ended December 31,
202320222021
(Dollars in thousands)
Net income$133,673 $218,277 $204,572 
Other comprehensive income (loss):
Change in unrealized net holding gains (losses) on securities AFS32,543 (297,919)(65,551)
Change in unrealized net holding losses on securities transferred from AFS to HTM— (36,576)— 
Change in unrealized net holding gains on interest rate contracts used in cash flow hedges17,024 23,062 2,893 
Reclassification adjustments for net (gains) losses realized in net income(12,514)253 319 
Tax effect(10,934)91,735 18,174 
Other comprehensive income (loss), net of tax26,119 (219,445)(44,165)
Total comprehensive income (loss)$159,792 $(1,168)$160,407 
See accompanying notes to consolidated financial statements

F-7


HOPE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2023, 2022, AND 2021
Common stockAdditional paid-in capitalRetained
earnings		Treasury stockAccumulated other comprehensive income (loss), netTotal
stockholders’ equity
 SharesAmount
 (Dollars in thousands, except share and per share data)
BALANCE, JANUARY 1, 2021123,264,864 $136 $1,434,916 $785,940 $(200,000)$32,753 $2,053,745 
Adoption of ASU 2020-06(21,420)10,715 (10,705)
Adoption of ASU 2020-06 tax adjustment3,160 3,160 
Issuance of shares pursuant to various stock plans, net of forfeitures and tax withholding cancellations423,856 — 
Stock-based compensation5,042 5,042 
Cash dividends declared on common stock ($0.56 per share)(68,666)(68,666)
Comprehensive income:
Net income204,572 204,572 
Other comprehensive loss(44,165)(44,165)
Repurchase of treasury stock(3,682,268)(50,000)(50,000)
BALANCE, DECEMBER 31, 2021120,006,452 $136 $1,421,698 $932,561 $(250,000)$(11,412)$2,092,983 
Issuance of shares pursuant to various stock plans, net of forfeitures and tax withholding cancellations527,743 1 530 531 
Stock-based compensation8,775 8,775 
Cash dividends declared on common stock ($0.56 per share)(67,126)(67,126)
Comprehensive loss:
Net income218,277 218,277 
Other comprehensive loss(219,445)(219,445)
Repurchase of treasury stock(1,038,986)(14,667)(14,667)
BALANCE, DECEMBER 31, 2022119,495,209 $137 $1,431,003 $1,083,712 $(264,667)$(230,857)$2,019,328 
Adoption of ASU 2022-02407 407 
Adoption of ASU 2022-02 tax impact(120)(120)
Issuance of shares pursuant to various stock plans, net of forfeitures and tax withholding cancellations631,577 1 1 
Stock-based compensation8,960 8,960 
Cash dividends declared on common stock ($0.56 per share)(67,125)(67,125)
Comprehensive income:
Net income133,673 133,673 
Other comprehensive income26,119 26,119 
BALANCE, DECEMBER 31, 2023120,126,786 $138 $1,439,963 $1,150,547 $(264,667)$(204,738)$2,121,243 
See accompanying notes to consolidated financial statements.

F-8

F-5
Table of Contents



HOPE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
HOPE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2017, 2016, AND 2015
 Year Ended December 31,
 2017 2016 2015
 (Dollars in thousands, except per share data)
INTEREST INCOME:     
Loans, including fees$529,760
 $392,127
 $291,344
Securities36,917
 25,442
 18,611
Interest-bearing deposits in other banks and other investments5,427
 4,365
 3,705
Total interest income572,104
 421,934
 313,660
INTEREST EXPENSE:     
Deposits74,902
 48,091
 33,412
FHLB advances and federal funds purchased10,706
 7,560
 5,645
Other borrowings5,116
 2,928
 1,561
Total interest expense90,724
 58,579
 40,618
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES481,380
 363,355
 273,042
PROVISION FOR LOAN LOSSES17,360
 9,000
 8,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES464,020
 354,355
 265,042
NONINTEREST INCOME:     
Service fees on deposit accounts20,619
 15,964
 12,206
International service fees4,494
 3,693
 3,448
Loan servicing fees, net5,433
 3,519
 3,135
Wire transfer fees5,057
 4,326
 3,632
Net gains on sales of SBA loans12,774
 8,750
 12,665
Net gains on sales of other loans2,927
 2,920
 270
Net gains on sales or called securities available for sale301
 950
 424
Other income and fees14,810
 11,697
 7,911
Total noninterest income66,415
 51,819
 43,691
NONINTEREST EXPENSE:     
Salaries and employee benefits144,669
 107,944
 84,899
Occupancy28,587
 24,574
 19,391
Furniture and equipment14,643
 11,726
 9,245
Advertising and marketing10,281
 7,320
 5,090
Data processing and communication12,179
 11,403
 9,179
Professional fees14,954
 6,556
 5,585
Investments in affordable housing partnerships expenses13,862
 4,100
 1,442
FDIC assessments5,173
 4,165
 4,088
Credit related expenses582
 2,954

1,924
OREO expense, net3,100
 2,492
 1,523
Merger and integration expense1,781
 16,914
 1,540
Other16,790
 14,827
 9,478
Total noninterest expense266,601
 214,975
 153,384
INCOME BEFORE INCOME TAX PROVISION263,834
 191,199
 155,349
INCOME TAX PROVISION124,389
 77,452
 63,091
NET INCOME$139,445
 $113,747
 $92,258
EARNINGS PER COMMON SHARE     
Basic$1.03
 $1.10
 $1.16
Diluted$1.03
 $1.10
 $1.16
YEARS ENDED DECEMBER 31, 2023, 2022, AND 2021

Year Ended December 31,
 202320222021
 (Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$133,673 $218,277 $204,572 
Adjustments to reconcile net income to net cash from operating activities:
Discount accretion, net of depreciation and amortization15,569 20,087 26,000 
Stock-based compensation expense12,342 12,263 8,398 
Provision (credit) for credit losses29,100 9,600 (12,200)
Provision for unfunded loan commitments2,492 250 (195)
Distribution gain from investment in affordable housing partnerships(5,819)— — 
Write-down of ROU assets2,217 — — 
Net gains on sales of loans(4,322)(17,418)(12,883)
Net change in fair value of derivatives(16,225)(1,922)319 
Net losses on sales of OREO309 178 684 
Amortization of investments in affordable housing partnerships7,893 10,374 10,774 
Software impairment— — 2,146 
Net change in deferred income taxes4,140 (8,955)19,626 
Proceeds from sales of loans held for sale135,464 238,904 229,302 
Originations of loans held for sale(57,547)(55,466)(192,161)
Originations of servicing assets(1,892)(5,200)(2,880)
Net change in accrued interest receivable(9,186)(17,248)16,742 
Net change in other assets105,955 1,945 51,947 
Net change in accrued interest payable141,506 22,396 (10,434)
Net change in other liabilities(21,892)57,470 (15,546)
Net cash provided by operating activities473,777 485,535 324,211 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of interest earning deposits in other financial institutions— — (4,233)
Redemption of interest earning deposits in other financial institutions735 12,116 20,024 
Investment securities AFS:
Purchase of securities(460,116)(212,496)(1,159,057)
Proceeds from matured, called, or paid-down securities317,418 324,706 694,715 
Investment securities HTM:
Purchase of securities(5,545)(41,583)— 
Proceeds from matured, called, or paid-down securities16,457 11,638 — 
Proceeds from sales of equity investments— 20,603 1,277 
Purchase of equity investments(1,297)(350)— 
Proceeds from sales of other loans held for sale previously classified as held for investment326,759 160,805 335,888 
Purchase of loans receivable(3,666)(56,266)(214,988)
Net change in loans receivable1,124,918 (1,680,144)(671,581)
Proceeds from sales of OREO2,109 524 15,220 
Purchase of FHLB stock(4,650)(21,378)— 
Redemption of FHLB stock6,030 19,998 — 
Purchase of premises and equipment(13,123)(9,111)(7,220)
Purchase of BOLI policy(11,000)— — 
Proceeds from BOLI death benefits587 1,215 1,283 
Investments in affordable housing partnerships(5,733)(3,903)(4,368)
Net cash provided by (used in) investing activities1,289,883 (1,473,626)(993,040)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits(985,048)698,351 706,538 
Proceeds from FHLB advances5,450,000 23,750,885 2,319,000 
Repayment of FHLB advances(5,950,000)(23,450,885)(2,269,000)
Proceeds from FRB borrowings36,104,000 16,548,000 — 
Repayment of FRB borrowings(34,673,274)(16,283,000)— 
Repurchase of convertible notes(19,534)— — 
Repayment of convertible notes(197,107)— — 
Purchase of treasury stock— (14,667)(50,000)
Cash dividends paid on common stock(67,125)(67,126)(68,666)
Taxes paid in net settlement of restricted stock(3,382)(3,488)(3,356)
Issuance of additional stock pursuant to various stock plans1 531 — 
Net cash (used in) provided by financing activities(341,469)1,178,601 634,516 
NET CHANGE IN CASH AND CASH EQUIVALENTS1,422,191 190,510 (34,313)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD506,776 316,266 350,579 
CASH AND CASH EQUIVALENTS, END OF PERIOD$1,928,967 $506,776 $316,266 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid$379,910 $113,148 $62,081 
Income taxes paid$40,987 $96,398 $42,201 
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES
Transfer from loans receivable to OREO$105 $938 $— 
Transfer from loans receivable to loans held for sale$421,395 $311,535 $472,598 
Transfer from loans held for sale to loans receivable$22,400 $12,021 $19,625 
Transfer from investment securities AFS to HTM, at fair value$— $238,966 $— 
Lease liabilities arising from obtaining ROU assets$8,008 $16,977 $965 
New commitments to fund affordable housing partnership investments$15,000 $— $— 
See accompanying notes to consolidated financial statements.


F-6
Table of Contents



HOPE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2017, 2016, AND 2015
      
 For Year Ended December 31,
 2017 2016 2015
 (Dollars in thousands)
Net income$139,445
 $113,747
 $92,258
Other comprehensive loss:     
Change in unrealized losses on securities available for sale and interest only strips(5,796) (21,273) (5,717)
Reclassification adjustments for gains realized in net income(301) (950) (424)
Less tax effect(2,570) (9,398) (2,604)
Other comprehensive loss, net of tax(3,527) (12,825) (3,537)
Total comprehensive income$135,918
 $100,922
 $88,721



See accompanying notes to consolidated financial statements.


F-7
Table of Contents


HOPE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2017, 2016, AND 2015

 Common stock Additional paid-in capital 
Retained
earnings
 
Accumulated other comprehensive
income (loss), net
 Total stockholders’ equity
 Shares Amount    
 (Dollars in thousands, except share data)
BALANCE, JANUARY 1, 201579,503,552
 $79
 $541,589
 $339,400
 $1,705
 $882,773
Issuance of additional shares pursuant to various
  stock plans
56,235
 1
 (22)     (21)
Tax effects of stock plans    17
     17
Stock-based compensation    1,046
     1,046
Issuance of shares in exchange for Foster
  common stock
6,569
   116
     116
Redemption of stock warrant    (1,150)     (1,150)
Cash dividends declared on common stock
 ($0.42 per share)
      (33,407)   (33,407)
Comprehensive income:          

Net income      92,258
   92,258
Other comprehensive loss        (3,537) (3,537)
BALANCE, DECEMBER 31, 201579,566,356
 $80
 $541,596
 $398,251
 $(1,832) $938,095
Issuance of additional shares pursuant to various
  stock plans
179,997
 
 1,171
     1,171
Tax effect of stock plans    79
     79
Stock-based compensation    1,391
     1,391
Issuance of Hope stock options in exchange for Wilshire stock options    3,370
     3,370
Issuance of shares in exchange for Wilshire
  common stock
55,493,726
 55
 852,883
     852,938
Cash dividends declared on common stock
 ($0.45 per share)
      (42,493)   (42,493)
Comprehensive income:           
Net income      113,747
   113,747
Other comprehensive loss      
 (12,825) (12,825)
BALANCE, DECEMBER 31, 2016135,240,079
 $135
 $1,400,490
 $469,505
 (14,657) $1,855,473
Issuance of additional shares pursuant to various
  stock plans
271,812
 1
 1,864
     1,865
Stock-based compensation    2,660
     2,660
Cash dividends declared on common stock
 ($0.50 per share)
      (67,661)   (67,661)
Reclassification of stranded tax effects to retained
  earnings - ASU 2018-02
      3,597
 (3,597) —
Comprehensive income:           
Net income      139,445
   139,445
Other comprehensive loss        (3,527) (3,527)
BALANCE, DECEMBER 31, 2017135,511,891
 $136
 $1,405,014
 $544,886
 (21,781) $1,928,255
            

See accompanying notes to consolidated financial statements.


F-8
Table of Contents


HOPE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2017, 2016, AND 2015

 Year ended December 31,
 2017 2016 2015
 (Dollars in thousands, except share data)
CASH FLOWS FROM OPERATING ACTIVITIES (net of acquisition)     
Net income$139,445
 $113,747
 $92,258
Adjustments to reconcile net income to net cash from operating activities:     
      Depreciation, amortization, and accretion(14,903) (1,569) (4,530)
Stock-based compensation expense3,161
 2,967
 1,046
Provision for loan losses17,360
 9,000
 8,000
(Credit) provision for unfunded loan commitments(2,358) 179
 381
Valuation adjustment of premises held for sale1,084
 —
 —
Valuation adjustment of OREO2,041
 2,228
 1,267
Impairment of investments in affordable housing partnership4,846
 —
 —
Net gains on sales of SBA and other loans(15,701) (11,670) (12,935)
Earnings on BOLI(1,219) (1,438) (1,091)
Net change in fair value of derivatives78
 443
 —
Net (gains) losses on sale and disposal of premises and equipment(868) 176
 64
Net (gains) losses on sales of OREO(79) 16
 (1,147)
Net gains on sales or called securities available for sale(301) (950) (424)
Losses on investments in affordable housing partnership10,266
 4,100
 1,442
Net change in deferred income taxes34,740
 5,750
 (1,376)
Proceeds from sales of loans held for sale310,345
 239,203
 171,229
Originations of loans held for sale(276,537) (219,779) (140,466)
Origination of servicing assets(5,492) (4,472) (4,900)
Change in accrued interest receivable(3,099) (2,459) (1,561)
Change in other assets(1,987) 16,418
 (4,237)
Change in accrued interest payable5,098
 2,247
 152
Change in other liabilities(1,999) (23,532) 4,920
            Net cash provided by operating activities203,921
 130,605
 108,092
CASH FLOWS FROM INVESTING ACTIVITIES (net of acquisition)     
Net cash received from acquisition - Wilshire Bancorp, Inc.—
 100,127
 —
Purchase of interest bearing deposits in other financial institutions and other investments(30,477) (2,962) (44,001)
Proceeds from maturity of interest bearing deposits in other financial institutions and other investments21,313
 13,465
 490
Purchase of securities available for sale(572,528) (553,336) (397,885)
Proceeds from matured, called, or paid-down securities available for sale264,730
 238,605
 146,407
Proceeds from sales of securities available for sale128,791
 217,079
 22,510
Proceeds from sales of other loans417
 634
 2,893
Net change in loans receivable(564,536) (487,961) (673,899)
Proceeds from sales of OREO14,802
 17,390
 11,309
Purchase of FHLB stock(8,573) (97) (150)
Redemption of FHLB stock761
 13,636
 9,510
Purchase of premises and equipment(14,777) (14,320) (10,924)
Proceeds from sales of premises and equipment5,084
 —
 7
Investments in affordable housing partnerships(12,342) (5,616) (1,261)
Net cash used in investing activities(767,335) (463,356) (934,994)

F-9

Table of Contents


HOPE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
YEARS ENDED DECEMBER 31, 2017, 2016, AND 2015

 Year ended December 31,
 2017 2016 2015
CASH FLOWS FROM FINANCING ACTIVITIES     
Net change in deposits209,477
 494,549
 647,710
Proceeds from FHLB advances1,420,000
 825,000
 350,000
Repayment of FHLB advances and prepayment fees(1,015,000) (806,610) (300,000)
Proceeds from federal funds purchased69,900
 —
 —
Cash dividends paid on common stock(67,661) (42,493) (33,407)
Issuance of additional stock pursuant to various stock plans1,865
 1,171
 (22)
Tax effects of issuance of shares from various stock plans—
 79
 —
Taxes paid in net settlement of restricted stock(501) —
 —
Redemption of common stock warrant—
 —
 (1,150)
Net cash provided by financing activities618,080
 471,696
 663,131
NET CHANGE IN CASH AND CASH EQUIVALENTS54,666
 138,945
 (163,771)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD437,334
 298,389
 462,160
CASH AND CASH EQUIVALENTS, END OF PERIOD$492,000
 $437,334
 $298,389
      
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION     
      Interest paid$91,081
 $62,624
 $40,466
      Income taxes paid$104,158
 $65,726
 $61,568
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES     
Transfer from loans receivable to OREO$7,173
 $5,646
 $11,373
Loans transferred to held for sale from loans receivable$429
 $11,885
 $685
Loans transferred to loans receivable from held for sale$4,100
 $9,163
 $—
Transfer from premises and equipment to premises held for sale$3,300
 $—
 $—
Loans to facilitate sale of premises$1,350
 $—
 $—
Loans to facilitate sale of OREO$2,300
 $—
 $—
New commitments to fund affordable housing partnership investments$26,400
 $1,327
 $14,794
Assets acquired from Wilshire$—
 $4,627,604
 $—
Liabilities assumed from Wilshire$—
 $4,130,342
 $—
Common stock issued in consideration for Wilshire—
 55,493,726
 —



See accompanying notes to consolidated financial statements.

F-10
Table of Contents


HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016,2023, 2022, AND 20152021



1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations—Hope Bancorp, Inc. (“Hope Bancorp” on a parent-only basis and the “Company” on a consolidated basis, previously known as BBCN Bancorp, Inc.)basis), headquartered in Los Angeles, California, is the holding company for Bank of Hope (the “Bank,” previously known as BBCN Bank)“Bank”). The Bank has 54 branches in California, Washington, Texas, Illinois, Alabama, Georgia, Virginia, New Jersey, and New York, as well asnine loan production offices in Atlanta, Dallas, Denver, Portland, Seattle, Newport Beach, Laguna Niguel,California, New York, Texas, Washington, Illinois, New Jersey, Virginia, Georgia, Alabama, Colorado and Northern California.Oregon as well a representative office in Seoul, South Korea. Hope Bancorp is a corporation organized under the laws of the state of Delaware and a bank holding company registered under the Bank Holding Company Act of 1956, as amended. The Bank is a California-chartered bank and its deposits are insured by the FDIC to the extent provided by law. The Company specializes in core business bankingWe offer a full suite of consumer and commercial loan, deposit and fee-based products for small and medium-sized businesses, with an emphasis in commercial real estateservices, including CRE, C&I, SBA, residential mortgage and business lending, SBA lendingother consumer lending; treasury management services and international trade financing.finance; foreign currency exchange transactions; interest rate contracts and wealth management.
Principles of Consolidation—The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America and conform to practices within the banking industry. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, principally the Bank. Intercompany transactions and balances are eliminated in consolidation.
Cash Flowsand Cash Equivalents—Cash and cash equivalents include cash and due from banks, interest-earning deposits, federal funds sold and term federal funds sold, which have original maturities less than 90 days. The Company may be required to maintain reserve and clearing balances with the Federal Reserve Bank under the Federal Reserve Act. The reserve and clearing requirement balance was $0 at December 31, 20172023 and 2016.2022. Net cash flows are reported for customer loan and deposit transactions, investment transactions, federal funds purchased, deferred income taxes, and other assets and liabilities.
Interest-BearingInterest Earning Deposits in Other Financial Institutions and Other Investments—Interest-bearing deposits in other financial institutions and other investments are comprised of the Company’s investments in certificates of deposits that have original maturities greater than 90 days. Other investments are also comprised of the Company’s investment in funds to partially satisfy the Company’s requirements under the Community Reinvestment Act. The funds do not have a readily determinable fair value as of the balance sheet date.
Investment Securities—Securities are classified and accounted for as follows:
(i)Securities that the Company has the positive intent and ability to hold to maturity are classified as “held-to-maturity” and reported at amortized cost. At December 31, 2017 and 2016, the Company did not own securities in this category;
(ii)Securities are classified as “available-for-sale” when they might be sold before maturity and are reported at fair value. Unrealized holding gains and losses are reported as a separate component of stockholders’ equity in accumulated other comprehensive income (loss), net of taxes.
(i)Securities that the Company has the positive intent and ability to hold to maturity are classified as “held to maturity” and reported at amortized cost.
(ii)Securities are classified as “available for sale” when they might be sold before maturity and are reported at fair value. Unrealized holding gains and losses are reported as a separate component of stockholders’ equity in accumulated other comprehensive income, net of taxes.
Accreted discounts and amortized premiums on securities are included in interest income using the interest method, and realized gains or losses related to sales of securities recorded on trade date and are calculated using the specific identification method, without anticipating prepayments, except for mortgage-backed securities where prepayments are expected.
Management evaluates securities for other than temporary impairment (“OTTI”) at least onThe Company has made a quarterly basis and more frequently when economic conditions warrant such evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss and the financial condition and near-term prospects of the issuer. Management also assesses whether it intendspolicy election to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected andexclude accrued interest from the amortized cost basis. For equitybasis of debt securities and report accrued interest separately in “Accrued interest” and “Other assets” on the entire amountConsolidated Statements of impairmentFinancial Condition. Investment securities AFS and HTM are placed on non-accrual status when management no longer expects to receive all contractual amounts due, which is recognized through earnings.generally at 90 days past due. Accrued interest receivable is reversed against interest income when a security is placed on non-accrual status. Accordingly, the Company does not recognize an allowance for credit loss against accrued interest receivable.

Management may transfer investment securities classified as AFS to HTM when upon reassessment it is determined that the Company has both the positive intent and ability to hold these securities to maturity. The investment securities are transferred at fair value resulting in a premium or discount recorded on the transfer date. Unrealized gains or losses at the date of transfer continue to be reported as a separate component of accumulated other comprehensive income/loss, net (“AOCI”). The premium or discount and the unrealized gain or loss, net of tax, in AOCI will be amortized to interest income over the remaining life of the securities using the interest method. In 2022, the Company transferred $239.0 million in fair value of AFS securities to HTM. There were no transfers in 2023.


F-11
F-10

Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Investment securities AFS are recorded at fair value, with unrealized gains and losses, net of tax, reported as a separate component of AOCI. For investment securities AFS in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more-likely-than-not that it will be required to sell, the securities before recovery of the amortized cost basis. If either of these criteria is met, the securities’ amortized cost basis is written down to fair value as a current period expense recorded on the Consolidated Statements of Income and Comprehensive Income. If either of the above criteria is not met, management evaluates whether the decline in fair value is the result of credit losses or other factors. In making this assessment, management may consider various factors including the extent to which fair value is less than amortized cost, performance of any underlying collateral and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security and any excess is recorded as an allowance for credit losses, limited to the amount by which the fair value is less than the amortized cost basis. Any impairment not recorded through an allowance for credit losses is recognized in AOCI, net of tax, as a non-credit related impairment.
For allowance for credit losses on investment securities AFS and HTM, refer to the Allowance for Credit Losses on Securities AFS and Allowance for Credit Losses on Securities HTM sections of Note 3 “Investment Securities” for details.
Equity Investments—Equity investments include mutual funds, correspondent bank stock, Community Development Financial Institutions Fund (“CDFI”) investments, and Community Reinvestment Act (“CRA”) investments. The Company’s mutual funds are considered equity investments with readily determinable fair values and changes to fair value are recorded in other noninterest income. The Company’s investment in correspondent bank stock, CDFI investments, and CRA investments are equity investments without readily determinable fair values. Equity investments without readily determinable fair values are measured at cost, less impairment, and are adjusted for observable price changes which is recorded in noninterest income.
Derivative Financial Instruments and Hedging Transactions—As part of the Company’s asset and liability management strategy, the Company may enter intouses derivative financial instruments, such as interest rate swaps, risk participation agreements, foreign exchange contracts, collars, and caps and floors, with the overall goal of minimizing the impact of interest rate fluctuations on net interest margin. The Company’s interest rate swaps and caps involve the exchange of fixed rate and variable rate interest payment obligations without the exchange of the underlying notional amounts and are therefore accounted for as stand-alone derivatives. Derivative instruments are included in other assets or accrued expenses and other liabilities on the Consolidated Statements of Financial Condition at fair value. At the inception of the derivative contract, the Company designates the derivative as (1) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”), or (2) an instrument with no hedging designation (“stand-alone derivative”). For a cash flow hedge, the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Changes in the fair value of the stand-alone derivatives that do not qualify for hedge accounting are reported currently in earnings, in noninterest income. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in earnings as noninterest income. The related cash flows are recognized on the cash flows from operating activities section on the Consolidated Statements of Cash Flows. Residential mortgage loans funded with interest rate lock commitments and forward commitments for the future delivery of mortgage loans to third party investors, are both considered derivatives. The Company accounts for loan commitments related to the origination of mortgage loans that will be held-for-sale as derivatives at fair value on the balance sheet, with changes in fair value recorded in earnings.earnings in the period in which the changes occur. As part of the Company’s overall risk management, the Company’s Asset Liability Committee,ALM, which meets monthly, monitors and measures interest rate risk and the sensitivity of assets and liabilities to interest rate changes, including the impact of derivative transactions.

F-11


HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company formally documents all relationships between derivatives and hedged items, as well as the risk-management objective and strategy for undertaking various hedge transactions. This documentation includes linking cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. The Company discontinues hedge accounting prospectively when it is determined that (1) the derivative is no longer effective in offsetting changes in the cash flows of the hedged item, (2) the derivative expires, is sold, or terminated, (3) the derivative instrument is de-designated as a hedge because the forecasted transaction is no longer probable of occurring, (4) a hedged firm commitment no longer meets the definition of a firm commitment, or (5) management otherwise determines that designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as noninterest income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transaction is still expected to occur, changes in value that were accumulated in other comprehensive income are amortized or accreted into earnings over the same periods which the hedged transactions will affect earnings.
The Company enters into interest rate collars which is an interest rate risk management tool that effectively creates a band within which the borrower's variable interest rate fluctuates, by combining an interest rate cap (or ceiling) with an interest rate floor. The Company entered into interest rate collar derivatives as a protection should the Fed lower interest rates in the event of a recession or other economic changes. The interest rate collars are designated as cash flow hedges.
The Company enters into risk participation agreements with outside counterparties for interest rate swaps related to loans in which it is a participant. The risk participation agreements provide credit protection to the financial institution should the borrower fail to perform on its interest rate derivative contract. Risk participation agreements are credit derivatives not designated as hedges. Credit derivatives are not speculative and are not used to manage interest rate risk in assets or liabilities. Changes in the fair value in credit derivatives are recognized directly in earnings. The fee received, less the estimate of the loss for credit exposure, was recognized in earnings at the time of the transaction.
The Company enters into foreign exchange contracts to accommodate the business needs of its customers and to manage its foreign currency risk. For the foreign exchange contracts entered with its customers, the Company entered into offsetting foreign exchange contracts with third-party financial institutions to manage its exposure. The fair value of foreign exchange contracts is determined at each reporting period based on changes in the foreign exchange rates. These are over-the-counter contracts where quoted market prices are not readily available.
Loans Held for Sale—Small Business Administration (“SBA”) and residential mortgage loans that the Company has the intent to sell prior to maturity have been designated as held for sale at origination and are recorded at the lower of cost or fair value, on an aggregate basis. Certain loans which were originated with the intent to hold to maturity are subsequently transferred to held for sale once there is an intent to sell the loan. A valuation allowance is established if the aggregate fair value of such loans is lower than their cost and charged to earnings. Gains or losses recognized upon the sale of loans are determined on a specific identification basis. Loan transfers are accounted for as sales when control over the loan has been surrendered. Control over such loans is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Company does not maintain control over the transferred assets through an agreement to repurchase them before their maturity.
Loans—Loans Receivable—Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the amount of unpaid principal, balance outstanding,adjusted for net of any purchase discounts, unearned interest, deferred loan fees and costs, premiums and andiscounts, purchase accounting fair value adjustments, and allowance for loancredit losses. Interest income is accrued on the unpaid principal balance. Nonrefundable loan origination fees and certain direct origination costs are deferred and recognized in interest income using the level-yield method over the life of the loan. Interest on loans is credited to income as earned and is accrued only if deemed collectible.
F-12


HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The loan portfolio consists of four segments: commercial real estate (“CRE”) loans, commercial and industrial (“C&I”) loans, residential mortgage loans, and consumer and other loans. CRE loans are extended for the purchase and refinance of commercial real estate and are generally secured by first deeds of trust and are collateralized by residential or commercial properties. C&I loans are loans provided to businesses for various purposes such as for working capital, purchasing inventory, debt refinancing, business acquisitions, international trade finance activities, and other business related financing needs, and also include syndicated loans. The Company exited its residential mortgage warehouse line business in 2023. Residential mortgage loans are extended for personal, family, or household use and are secured by a mortgage or deed of trust. Consumer and other loans consist of home equity, credit card, and other personal loans.
Generally, loans are placed on nonaccrual status and the accrual of interest is discontinued if principal or interest payments become 90 days past due and/or management deems the collectibilitycollectability of the principal and/or interest to be in question. Loans to a customer whose financial condition has deteriorated are considered for nonaccrual status whether or not the loan is 90 days or more past due. Generally, payments received on nonaccrual loans are recorded as principal reductions. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
Other loan fees and charges, representing service costs for the prepayment of loans, for delinquent payments, or for miscellaneous loan services, are recorded as income when collected.
Loans are categorizedThe Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including, but not limited to, current financial information, historical payment experience, credit documentation, public information, and current economic trends. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes all loans with the exception of homogeneous loans, or loans that are evaluated together in pools of similarHomogeneous loans (i.e., home mortgage loans, home equity lines of credit, overdraft loans, express business loans, and automobile loans). are not risk rated and credit risk is analyzed largely by the number of days past due. This analysis is performed at least on a quarterly basis. The Company uses the following definitions for risk ratings:basis:
•Pass: Loans that meet a preponderance or more of the Company’s underwriting criteria and that evidence an acceptable level of risk.
•Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.
•Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligorborrower or ofby the collateral pledged, if any. Loans so classifiedin this classification have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
•Doubtful/Loss: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Allowance for Credit Losses (“ACL”)—The Company calculates its ACL by estimating expected credit losses on a collective basis for loans that share similar risk characteristics. Loans that do not share similar risk characteristics with other loans are evaluated for credit losses on an individual basis. The Company differentiates its loan segments based on shared risk characteristics for which allowance for credit losses is measured on a collective basis.
Risk Characteristics
CRE loansProperty type, location, owner occupied status
C&I loansDelinquency status, risk rating, industry type
Residential mortgage loansFICO score, LTV, delinquency status, maturity date, collateral value, location
Consumer and other loansHistorical losses
The Company uses a combination of a modeled and non-modeled approach that incorporates current and future economic conditions to estimate lifetime expected losses on a collective basis. The Company uses Probability of Default (“PD”), Loss Given Default (“LGD”), and Exposure at Default (“EAD”) methodologies with quantitative factors and qualitative considerations in calculation of the allowance for credit losses for collectively assessed loans. The Company uses a reasonable and supportable period of 2 years at which point loss assumptions revert back to historical loss information by means of 1 year reversion period.
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Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The ACL for the Company’s construction, credit card, and certain consumer loans is calculated based on a non-modeled approach utilizing historical loss rates to estimate losses. A non-modeled approach was chosen for these loans as fewer data points exist which could result in high levels of estimated loss volatility under a modeled approach. Materiality was another factor in using a non-modeled approach for these loans as in aggregate, non-modeled loans represented approximately 2% of the Company’s total loan portfolio as of December 31, 2023.
Allowance for Loan Losses—The Economic Forecast Committee (“EFC”) reviews multiple scenarios put together by an independent third party and chooses a single scenario that best aligns with management’s expectation of future economic conditions. The forecast scenarios contain certain macroeconomic variables that are incorporated into the Company’s modeling process, including GDP, unemployment rates, interest rates, and commercial real estate prices. As of December 31, 2023, the Company chose a forecast scenario that incorporated the latest projected economic assumptions. The allowance for loan losses is a valuation allowance for probable incurred credit losses at December 31, 2023, utilized the Moody’s consensus scenario, as well as more specific information, including updated market data that are inherent inreflects the loan portfolio. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. Allocations ofaligned with management’s view. In the allowance may be made for specific loans, butprior year, the entire allowance is available for any loan that,Company also utilized Moody’s consensus scenario in management’s judgment, should be charged off.its ACL calculation.
The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for qualitative factors.
The general component covers non-impaired loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment. The Company further segregates these segments between loans accounted for under the amortized cost method (referred to as “Legacy Loans”) and acquired loans (referred to as “Acquired Loans”), as Acquired Loans were originally recorded at fair value with no carryover of the related allowance for loan losses.
The historical loss experience for Legacy Loans is based on the actual loss history experienced by the Company. The loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations.
The following major portfolio segments have been identified: real estate loans (residential, commercial, and construction), commercial business loans, trade finance loans, and consumer/other loans. Due to the overall high level of real estate loans within the loan portfolio as a whole, as compared to other portfolio segments, for risk assessment and allowance purposes this segment was segregated into more granular pools by collateral property type.
Our real estate loan portfolio is subject to certain risks, including: a decline in the economies of our primary markets, interest rate increases, a reduction in real estate values in our primary markets, increased competition in pricing and loan structure, and environmental risks, including natural disasters. Our commercial business and trade finance loan portfolio are subject to certain risks, including: a decline in the economy in our primary markets, interest rate increases, and deterioration of a borrower’s or guarantor’s financial capabilities. Our consumer loan portfolio is subject to the same risk associated with our commercial business loan portfolio but also includes risk related to consumer bankruptcy laws which allow consumers to discharge certain debts.
The Company uses a loan migration analysis which is a formula methodology based on the Bank’s actual historical net charge off experience for each loan class (type) pool and risk grade. The migration analysis is centered on the Bank’s internal credit risk rating system. The Company’s internal loan review and external contracted credit review examinations are used to determine and validate loan risk grades. This credit review system takes into consideration factors such as: borrower’s background and experience; historical and current financial condition; credit history and payment performance; economic conditions and their impact on various industries; type, fair value and volatility of the fair value of collateral; lien position; and the financial strength of any guarantors.
A general loan loss allowance is provided on loans not specifically identified as impaired (“non-impaired loans”). The Bank’s general loan loss allowance has two components: quantitative and qualitative risk factors. The quantitative risk factors are based on a historical loss migration methodology. The loans are classified by class and risk grade and the historical loss migration is tracked for the various classes. Loss experience is quantified for a specified period and then weighted to place more significance to the most recent loss history. That loss experience is then applied to the stratified portfolio at each quarter end.
Additionally, inIn order to systematically quantify the credit risk impact of other trends and changes within the loan portfolio that may not be captured by the Bankmodeled and non-modeled approach, the Company utilizes qualitative adjustments to the Migration Analysis within established parameters.estimate total expected losses. The parameters for making adjustments are established under a Credit Risk Matrix that provides sevendifferent possible scenarios for each of the factors below. The matrix allows for up to three positive (major, moderate, and minor), three negative (major, moderate, and minor), and one neutral credit risk scenarios within each factor for each loan type pool. Generally, the factors are considered to have no significant impact (neutral) to our historical migration ratios. However, if information exists to warrant adjustment to the Migration Analysis, changes are made in accordance with the established parameters supported by narrative and/or statistical analysis. The Credit Risk Matrix and the nine possible scenarios enable the Bank to qualitatively adjust the Loss Migration Ratioallowance for credit losses by as much as 5025 basis points in either direction (positive or negative) for each loan type pool.factor. This matrix considers the following nineseven factors, which are patterned after the guidelines provided under the FFIECFederal Financial Institutions Examination Council (“FFIEC”) Interagency Policy Statement on the Allowance for Loan and Lease Losses:Losses, updated to reflect the application of the CECL methodology:
•Changes in lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices.practices;

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Changes in national and local economic and business conditions and developments, including the condition of various market segments.
•Changes in the nature and volume of the loan portfolio.portfolio;
•Changes in the experience, ability and depth of lending management and staff.staff;
•Changes in the trends of the volume and severity of past due loans, Classified Loans,classified loans, nonaccrual loans, troubled debt restructurings and other loan modifications.modifications;
•Changes in the quality of ourthe loan review system and the degree of oversight by the Directors.management and the Board;
Changes in the value of underlying collateral for collateral-dependent loans.
•The existence and effect of any concentrations of credit and changes in the level of such concentrations.concentrations; and
•The effect of other external factors, such as competition, and legal and regulatory requirements, and others that have an impact on the level of estimated losses in the Company’s loan portfolio.
TheFor loans that do not share similar risk characteristics such as nonaccrual loans above $1.0 million, the Company also establishes specific loss allowances forevaluates these loans where we have identified potential credit risk conditions or circumstances related to a specificon an individual credit. The specific allowance amounts are determined by a method prescribed by ASC 310-10-35-22, Measurement of Impairment. The loans identified as impaired will be accounted forbasis in accordance with oneASC 326. Such nonaccrual loans are considered to have different risk profiles than performing loans and are therefore evaluated individually. The Company elected to collectively assess nonaccrual loans with balances below $1.0 million along with the performing and accrual loans in order to reduce the operational burden of individually assessing small nonaccrual loans with immaterial balances. For individually assessed loans, the three acceptable valuation methods:ACL is measured using either 1) the present value of future cash flows discounted at the loan’s effective interest rate; 2) the loan’s observable market price; or 3) the fair value of the collateral, if the loan is collateral dependent.collateral-dependent. For the collateral dependent impairedcollateral-dependent loans, the Company obtains a new appraisal to determine the amountfair value of impairment as of the date that theunderlying loan became impaired.collateral. The appraisals are based on an “as is”“as-is” valuation. To ensure that appraised values remain current, the Company either obtains updated appraisals every twelve months from a qualified independent appraiser or an internal re-valuationevaluation of the collateral is performed by qualified personnel. If the third-party market data indicates that the value of the collateral property has declined since the most recent valuation date, management adjusts the value of the property downward to reflect current market conditions. If the fair value of the collateral less cost to sell, is less than the recorded amountamortized balance of the loan, the Company then recognizes impairment by creating or adjusting an existing valuation allowanceACL with a corresponding charge to the provision for loan losses. If an impaired loan is expected to be collected through liquidation of the underlying collateral, the loan is deemed to be collateral dependent and the amount of impairment is charged off against the allowance for loan losses.
The Bank considers a loan to be impaired when it is probable that not all amounts due (principal and interest) will be collectible in accordance with the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The significance of payment delays and payment shortfalls is determined on a case-by-case basis by taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed.
For commercial business loans, real estate loans and certain consumer loans, the Company bases the measurement of loan impairment on the present value of the expected future cash flows, discounted at the loan’s effective interest rate or on the fair value of the loan’s collateral, less estimated costs to sell, if the loan is collateral dependent. Management evaluates most consumer loans for impairment on a collective basis because these loans generally have smaller balances and are homogeneous in the underwriting of terms and conditions and in the type of collateral.
Impairment losses are included in the allowance for loan losses through a charge to the provision for loan losses. Upon disposition of an impaired loan, any unpaid balance is charged off to the allowance for loancredit losses.
The allowance for loan losses for acquired credit impaired loans is based upon expected cash flows for these loans. To the extent that a deterioration in borrower credit quality results in a decrease in expected cash flows subsequent to the acquisition of the loans, an allowance for loan losses would be established based on management’s estimate of future credit losses over the remaining life of the loans.
Acquired Loans—Loans that the Company acquires are recorded at fair value with no carryover of the related allowance for loan losses. On the date of acquisition, the Company considers acquired classified loans credit impaired loans (“Purchased Credit Impaired Loans” or “PCI loans”) under the provisions of Accounting Standards Codification (“ASC”) 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. On the date of acquisition, loans without credit impairment (“Acquired Performing Loans” or “Non-PCI loans”) are not accounted for under ASC 310-30. Acquired loans are placed in pools with similar risk characteristics and recorded at fair value as of the acquisition date.
For PCI loans, the cash flows expected to be received over the life of the pools were estimated by management with the assistance of a third party valuation specialist. These cash flows were utilized in calculating the carrying values of the pools and

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With the adoption of CECL, the Company elected not to consider accrued interest receivable in its estimates of expected credit losses because the Company writes off uncollectible accrued interest receivable in a timely manner. The Company considers writing off accrued interest amounts once the amounts become 90 days past due to be considered within a timely manner for all of its loan segments. The Company has elected to write off accrued interest receivable by reversing interest income.
underlying loans, book yields, effective interest income and impairment, if any, basedLoan Modifications to Borrowers Experiencing Financial Difficulty. Prior to the adoption of ASU 2022-02, the Company accounted for the modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulties as a troubled debt restructuring (“TDR”). Effective January 1, 2023, the Company adopted ASU 2022-02, which eliminated TDR accounting prospectively for all restructurings occurring on actual and projected events. Default rates, loss severity and prepayment speed assumptions are periodically reassessed and updated withinor after January 1, 2023. Loans that were considered a TDR prior to the accounting modeladoption of ASU 2022-02 will be collectively evaluated for Allowance for Credit Losses (“ACL”) purposes until the loan is paid off, liquidated, or subsequently modified. Since its adoption of ASU 2022-02 on January 1, 2023, the Company has evaluated all loan modifications under ASC 310-20 to update the expectation of future cash flows. The excessdetermine whether a modification made to a borrower results in a new loan or is a continuation of the cash expectedexisting loan. GAAP requires the Company to make certain disclosures related to these loans, including certain types of modifications, as well as how such loans have performed since their modifications. Please see Note 4 “Loans Receivable and the Allowance for Credit Losses” for additional information concerning loan modifications to borrowers experiencing financial difficulty.
Purchase Credit Deteriorated (“PCD”) — PCD is a classification of purchased financial assets for which there has been a more-than insignificant deterioration in credit quality since origination. The Company adds the allowance for credit losses at the date of acquisition to the purchase price to determine the initial amortized cost basis for purchased financial assets with credit deterioration. Any noncredit discount or premium resulting from acquiring loans with credit deterioration shall be collected overallocated to each individual asset. At the pools’ carrying valueacquisition date, the initial allowance for credit losses is considered to be the accretable yielddetermined on a collective basis and is recognized asallocated to individual assets to appropriately allocate any noncredit discount or premium. The Company accounts for purchased financial assets that do not have a more-than-insignificant deterioration in credit quality since origination in a manner consistent with originated financial assets. After initial recognition, the Company shall treat PCD assets like all other loans and apply one of the impairment models under CECL for instruments measured at amortized cost. The noncredit discount shall be amortized into interest income over the estimated life of the loan or pool usingloan. Subsequent changes to the effective interest yield method. The accretable yield may change due to changes in the timing and amounts of expected cash flows. Changes in the accretable yield is disclosed quarterly.
For PCI loans, the excess of the contractual balances due over the cash flows expected to be collected is considered to be nonaccretable difference. The nonaccretable difference represents our estimate of theallowance for credit losses expected to occur and was considered in determining the fair value of the loans as of the date of acquisition. Subsequent to the date of acquisition, any increases in expected cash flows over those expected at purchase date in excess of fair value are adjustedrecorded through the accretable difference on a prospective basis. Any subsequent decreases in expected cash flows over those expected at the acquisition date are recognized by recording a provision for loan losses that will maintain the original expected yield.credit losses.
PCI loans that met the criteria for nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if management can reasonably estimate the timing and amount of the expected cash flows on such loans and if management expects to fully collect the new carrying value of the loans. As such, management may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable discount. Management has determined that future cash flows are reasonably estimable on any such acquired loans that are past due 90 days or more and accruing interest. Management expects to fully collect the carrying value of the loans.
OREO—OREO, which represents real estate acquired through foreclosure in satisfaction of commercial and real estate loans, is stated at fair value less estimated selling costs of the real estate. Loan balances in excess of the fair value of the real estate acquired at the date of acquisition are charged to the allowance for loancredit losses. Any subsequent operating expenses or income, reduction in estimated fair values, and gains or losses on disposition of such properties are charged or credited to current operations. For the year ended December 31, 2017,2023, the Company foreclosed on properties with an aggregate carrying value of $7.2 million.$105 thousand. The Company recorded $3.7 million$43 thousand in net valuation adjustmentslosses subsequent to the foreclosures during the year ended December 31, 2023, and the Company sold OREO properties for total proceeds of $14.8 million.$2.1 million during the year. For the year ended December 31, 2022, the Company foreclosed on properties with an aggregate carrying value of $938 thousand. The Company recorded $415 thousand in net valuation losses subsequent to the foreclosures during the year ended December 31, 2022, and the Company sold OREO properties for total proceeds of $524 thousand during the year.
FHLB Stock—The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.
Premises and Equipment—Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of premises and equipment are computed on the straight-line method over the following estimated useful lives:
•Buildings - 15 to 39 years
•Furniture, fixture, and equipment - 3 to 10 years
•Computer equipment - 1 to 5 years
•Computer software - 1 to 5 years
•Leasehold improvement - life of lease or improvements, whichever is shorter
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Buildings15-39years
Furniture, fixture, and equipment3-10years
Computer equipment1-5years
Computer software1-5years
Leasehold improvement    life of lease or improvements, whichever is shorter
Mortgage Banking Derivatives — Mortgage banking derivatives are instruments used to hedge the risk to residential mortgage loans sales from changes in interest rates. Residential mortgage loans funded with interest rate lock commitments and forward commitments for the future delivery of mortgage loans to third party investors, are both considered derivatives. The Company accounts for loan commitments related to the origination of mortgage loans that will be held-for-sale as derivatives at fair value on the balance sheet, with changes in fair value recorded in earnings. Commitments to originate mortgage loans that will be held for investment are not accounted for as derivatives and therefore are not recorded at fair value. Subsequent changes in the fair value of a derivative loan commitments are recognized in earnings in the period in which the changes occur.
BOLI—The Company has purchased life insurance policies on certain key executives and directors. BOLI is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.
Investments in Affordable Housing Partnerships—The Company owns limited partnerships interestpartnership interests in projects of affordable housing for lower income tenants. Under the equity method of accounting, the annual amortization is based on the estimated tax

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deduction amounts the bank would receive in the year. The carrying value of such investments and commitments to fund investment in affordable housing is recorded as “Investment“Investments in affordable housing partnerships” in the Consolidated StatementStatements of Financial Condition. CommitmentCommitments to fund investments in affordable housing is also included in this line items but is also grossed up and recorded as a liability.
Leases—Operating lease right-of-use (“ROU”) assets represent the Company’s right to use the underlying asset during the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the future lease payments using the Company’s incremental borrowing rate. The Company recordedcalculates its incremental borrowing rate by adding a spread to the FHLB borrowing interest rate at a given period. The Company defines short-term operating lease liabilities as liabilities due in twelve months or less, and long term lease liabilities are due in more than twelve months at the end of each reporting period. The Company does not capitalize short-term leases, which are leases with terms of twelve months or less. ROU assets and related operating lease liabilities are remeasured when lease terms are amended, extended, or when management intends to exercise available extension options. In accordance with ASC 360 "Property, Plant, and Equipment", an impairment on investments in affordable housing partnerships totaling $4.8 million for the year ended December 31, 2017 to account for the variance betweenloss is recognized when the carrying valueamount of individual investmentsan ROU asset is not recoverable and exceeds its fair value.
Operating lease expense, which is comprised of amortization of the ROU asset and the future expected tax benefits. Ofimplicit interest accreted on the $4.8 million impairmentoperating lease liability, is recognized on a straight-line basis over the lease term and is recorded in 2017, $3.2 million was recorded“Occupancy” expense in noninterestthe Consolidated Statements of Income. The Company’s occupancy expense also includes variable lease costs which is comprised of the Company's share of actual costs for utilities, common area maintenance, property taxes, and insurance that are not included in lease liabilities and are expensed as incurred. Variable lease costs also include rent escalations based on changes to reflect the impairment for the year ended December 31, 2017 and $1.6 million was recorded in income tax provision expensesindices, such as the re-evaluation was a direct result of the Tax Act which reduced corporate tax rates from 35% to 21%.Consumer Price Index.
Goodwill and Intangible Assets—Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrollingnon-controlling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized but tested for impairment at least annually.
In accordance with ASC 350 “Intangibles - Goodwill and Other”, the Company makes a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. If management concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the two-stepstep 1 impairment test is bypassed. Management assessed the qualitative factors related to goodwill as of December 31, 2017.2023, and determined a step 1 fair value assessment was not required. Based on the qualitative assessment, management determined that goodwill was not impaired at December 31, 2023. Goodwill is also testedassessed for impairment on an interim basis if circumstances change or an event occurs between annual testsassessments that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Significant judgment is applied when goodwill is assessed for impairment.The quantitative impairment assessment involves significant judgment. This judgment includes developing cash flow projections, selecting appropriate discount rates, calculation of a terminal growth rate, minimum target capitalization levels, identifying relevant market comparables, incorporating general economic and market conditions, and selecting an appropriate control premium. The selection and weighting of the various fair value techniques may result in a higher or lower fair value. Judgment is applied in determining the weighting that is most representative of fair value.
Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Core deposit intangibles are amortized over a seven to ten year period.
Loan Servicing Assets—The Company typically sells the guaranteed portion of SBA loans and retains the unguaranteed portion (“retained interest”). A portion of the premium on sale of SBA loans is recognized as gain on sale of loans at the time of the sale by allocating the carrying amount between the asset sold and the retained interest, including these servicing assets, based on their relative fair values. The remaining portion of the premium is recorded as a discount on the retained interest and is amortized over the remaining life of the loan as an adjustment to yield. The retained interest, net of any discount, are included in loans receivable—net of allowance for loancredit losses in the accompanying consolidated statementsConsolidated Statements of financial condition.Financial Condition.
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Servicing assets are recognized when SBA and residential mortgage loans are sold with servicing retained with the income statement effect recorded in gains on sales of loans. Servicing assets are initially recorded at fair value based on the present value of the contractually specified servicing fee, net of servicing costs, over the estimated life of the loan, using a discount rate. The Company’s servicing costs approximates the industry average servicing costs of 40 basis points. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.
Management periodically evaluates servicing assets for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. No impairment charges were required in 2017, 2016,recorded during the years 2023, 2022, or 2015.2021.
Stock-Based Compensation—Compensation cost is recognized for stock options and restricted stock awards issued to employees and directors, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.
Income Taxes—Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred income tax assets and liabilities represent the tax effects, based on current tax law, of future deductible or taxable amounts attributable to events that have been recognized in the financial statements. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable

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income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, the projected future taxable income and tax planning strategies in making this assessment. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.
A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest and / or penalties related to income tax matters in income tax expense.
Section 382 of the Internal Revenue Code imposes a limitation (“382 Limitation”) on a corporation’s ability to use any net unrealized built in losses and other tax attributes, such as net operating loss and tax credit carryforwards,carry-forwards, when it undergoes a 50% ownership change over a designated testing period not to exceed three years (“382 Ownership Change”). As a result of the acquisition on July 29, 2016, Wilshire Bancorp underwent a 382 Ownership Change resulting in a 382 Limitation to its net operating loss and tax credit carryforwards.carry-forwards. Wilshire Bancorp did not have a net unrealized built in loss as of the 382 Ownership Change date. Given the applicable 382 Limitation, the Company is expected to fully utilize Wilshire Bancorp’s net operating loss and tax credit carryforwardscarry-forwards before expiration. However, future transactions, such as issuances of common stock or sales of shares of the Company’s stock by certain holders of ourthe Company’s shares, including persons who have held, currently hold or may accumulate in the future 5% or more of ourthe Company’s outstanding common stock for their own account, could trigger a future Section 382 Ownership Change of the Company which could limit the Company’s use of these tax attributes.
Earnings per Common Share—Basic Earnings per Common Share is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted Earnings per Common Share reflects the potential dilution of common shares that could share in the earnings of the Company. Earnings and dividends per share are restated for all stock splits and stock dividends through the date of issuance of the financial statements.
Equity—The Company accrues for common stock dividends as declared. Common stock dividends of $67.7$67.1 million and $42.5$67.1 million, were paid in 20172023 and 2016,2022, respectively. There were no common stock dividends declared but unpaid at December 31, 20172023 and 2016.2022.
Dividend Restrictions—Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to the Company, or dividends paid by the Company to stockholders.
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Comprehensive Income (Loss)—Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes the changechanges in unrealized gains and losses on securities available for saleAFS, unrealized losses on transferred investment securities HTM, and interest-only stripsinterest rate swaps used in cash flow hedges which areis also recognized as separate components of stockholders’ equity, net of tax.
Operating Segments—The Company is managed as a single business segment. The financial performance of the Company is reviewed by the chief operating decision maker on an aggregate basis and financial and strategic decisions are made based on the Company as a whole. We consider “Banking Operations” is considered to be ourthe Company’s single combined operating segment, which raises funds from deposits and borrowings for loans and investments, and provides lending products, including construction, real estate, commercial, and consumer loans to its customers.
Revenue from Contracts with Customers—The Company recognizes revenue when obligations under the terms of a contract with customers are satisfied. Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. In addition, certain noninterest income streams such as fees associated with mortgage servicing rights, financial guarantees, derivatives, and certain credit card fees are also out of scope of the new guidance. Topic 606 is applicable to noninterest revenue streams such as deposit related fees, wire transfer fees, and certain OREO related net gains or expenses.
Loss Contingencies—Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. ManagementThe Company believes there are no such matters that would have a material effect on the consolidated financial statements as of December 31, 20172023 or 2016.2022. Accrued loss contingencies for all legal claims totaled approximately $414$535 thousand at December 31, 20172023, and $557$229 thousand at December 31, 2016.2022.
Loan Commitments and Related Financial Instruments—Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded. See Note 13 Commitments14 “Commitments and Contingencies of the Notes to Consolidated Financial StatementsContingencies” for further discussion.
Allowance for Unfunded Commitments—The allowance for unfunded commitments is maintained at a level believed by management to be sufficient to absorb estimated probable losses related to these unfunded credit facilities. The determination of the adequacy of the allowance is based on periodic evaluations of the unfunded credit facilities including an assessment of the probability of commitment usage, credit risk factors for loans outstanding to these same customers, and the terms and expiration dates of the unfunded credit facilities. The allowance for unfunded commitments is included in other liabilities“Other liabilities” on the consolidated statementConsolidated Statements of financial condition,Financial Condition, with changes to the balance charged against noninterest expense.

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Fair Values of Financial Instruments—Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.
Impairment of Long-Lived Assets—The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If the estimated future cash flows (undiscounted) over the remaining useful life of the asset are less than the carrying value, an impairment loss would be recorded to reduce the related asset to its estimated fair value.
Transfer of Financial Assets—Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
Use of Estimates in the Preparation of Consolidated Financial Statements—The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.
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Reclassifications -—Some items in the prior year financial statements were reclassified to conform to the current presentation. The reclassifications had no effect on the prior year net income or stockholders’ equity.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accounting Pronouncements Adopted
ASU 2016-09 “Compensation-Stock CompensationIn March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-02, Financial Instruments-Credit Losses (Topic 718)326): Improvements to Employee Share-Based Payment Accounting” was issued as a part ofTroubled Debt Restructurings (“TDR”) and Vintage Disclosures. The standard addresses the FASB’s simplification initiative, and intends to improvefollowing: 1) eliminates the accounting guidance for share-based payment transactions. The ASU changes several aspectsTDRs, and will require an entity to determine whether a modification results in a new loan or a continuation of the accounting for share-based payment award transactions, including accounting for excess tax benefits and deficiencies, income statement recognition, cash flow classification, forfeitures, and tax withholding requirements. The Company adopted ASU 2016-09 in the first quarter of 2017. As of result of the adoption of ASU 2016-09, the Company recognizes excess tax benefits on share-based payment awards in income tax provision on the Consolidated Statement of Income rather than in additional paid-in capital on the Consolidated Statement of Changes in Stockholders’ Equity. The Company recorded $118 thousand of income tax benefits for the year ended December 31, 2017an existing loan, 2) expands disclosures related to excess tax benefits from share-based payment awards.
In February 2018,modifications, and 3) will require disclosure of current period gross write-offs of financing receivables within the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220), “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”vintage disclosures table (see Note 4 “Loans Receivable and the Allowance for Credit Losses”). ASU 2018-02 was issued to allow the reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effect resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017. The Tax Cuts and Jobs Act among other things reduced the corporate tax rate from 35% to 21% which required the re-evaluation of any deferred tax assets or liabilities at the lowered tax rate which potentially could leave disproportionate tax effectsamendments in accumulated other comprehensive income. ASU 2018-02 allows for the election to reclassify these stranded tax effects to retained earnings. ASU 2018-02 isthis update are effective for all entities for fiscal years beginning after December 15, 2018,2022. On January 1, 2023, the Company adopted ASU 2022-02 by applying the amended requirements prospectively from the beginning of the fiscal year of adoption, January 1, 2023, except the recognition and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period for public business entities for reporting periodsmeasurement of existing TDRs, for which financial statements have not yet been issued. Thethe Company has chosenelected the option to early adopt ASU 2018-02 and has elected to reclassify its stranded taxapply a modified retrospective transition method. This resulted in a cumulative effect totaling $3.6 million in accumulated other comprehensive income that resulted from the change in tax ratesadjustment to retained earnings of $287 thousand, net of tax. The new guidance is applied uniformly to the Company’s entire loans held for the year endedinvestment portfolio when estimating expected credit losses, including both TDRs existing as of December 31, 2017.
Recently Issued Accounting Pronouncements Not Yet Adopted
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”2022, and in May 2016, FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” Both updates which supersedes the revenue recognition requirements in Topic 606, Revenue Recognition. ASU 2014-09 is based on the principle that revenue is recognizednew modifications to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 as amended by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, is effective for interim and annual periods beginning after December 15, 2017 and is applied on either a modified retrospective or full retrospective basis. The Company has elected to adopt the modified retrospective approach and will apply the guidance to the most current period presented in theborrowers experiencing financial statements for the first quarter of 2018.
The Company’s revenue primarily consists of net interest income and noninterest income. The scope of the guidance explicitly excludes net interest income, as well as other revenues from financial instruments such as loans, leases, securities and derivatives. The Company’s material revenue streams that will be in scope of Topic 606 are service fees on deposit accounts (including interchange fees), asset management fees, certain OREO gains (losses), and international fees. All other revenue streams are either immaterial, or are in the scope of other GAAP requirements which take precedence and therefore are not in the scope of Topic 606.
The largest in scope revenue source is the Company’s fees on deposit accounts. Based on the Company’s initial analysis, Topic 606 will not materially change the recognition of revenue on service fees on deposits accounts as the contracts are day to day and recognized as the service is provided. The Company is not the principal in terms of wealth management fees as it acts as an agent for another company who provides wealth management services on the Company’s behalf. As such, wealth management fees recognition will not change with the adoption of Topic 606. Gain or losses on the sale of OREO are generally accounted for under ASC 610. However, ASU 2014-09 also added new Subtopic 610-20 which addresses the recognition of gains and losses on the transfer of nonfinancial and in-substance nonfinancial assets. Gain and loss recognition is not expected to change except for OREO and other nonfinancial sales that are financed by the Company. In the case of financed sales, the Company will need to evaluate each contract to determine whether each contract criteria is met, including whether it is probable that it will collect substantially all of the consideration to which it will be entitled. The Company will also need to evaluate whether the financing terms offered to the buyer of the nonfinancial assets are market terms when determining the transaction price. As of the adoption date, there were no open sale contracts with a financing component. International fees are similar to service fees on deposits as the contracts are day to day and income is recognized as the service is provided and therefore Topic 606 is not expected to change the recognition of this line of revenue.

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difficulties. The adoption of ASU 2014-09 will2022-02 did not have a material impact on the Company’s consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The way certain in scope revenue stream are assessed will change as the Company will needstandard requires entities to apply the principles in the new standard using the following five steps; 1. Identify the contract(s) with a customer, 2. Identify the performance obligations in the contract, 3. Determine the transaction price, 4. Allocate the transaction priceTopic 606 to the performance obligations in the contract, 5. Recognize revenue when (or as) the entity satisfies a performance obligation. However, actual recorded revenue is not expected to change materially with the adoption of the new revenue recognition standard. ASU 2014-09 will require additional disclosures including disclosures of revenue recognized from contracts with customersrecognize and impairment recorded on recognized on contracts with customer, revenue disaggregated by types of categories that are most relevant to the Company, the opening and closing balances of receivables,measure contract assets and contract liabilities in a business combination. The ASU specifies for all acquired revenue contracts, regardless of their timing of payment, (1) the circumstances in which the acquirer should recognize contract assets and contract liabilities that are acquired in a business combination and (2) how to measure those contract assets and contract liabilities. The ASU does not affect the accounting for other assets or liabilities that may arise from revenue contracts with customers information about its performance obligations in accordance with Topic 606, such as refund liabilities, or in a business combination, such as customer-related intangible assets and contract-based intangible assets. For example, if acquired revenue contracts with customers, and judgments, and changes inare considered to have terms that are unfavorable or favorable relative to market terms, the judgments, made in applyingacquirer should recognize a liability or asset for the new guidance.
Inoff-market contract terms at the acquisition date. The Company adopted ASU 2021-08 on January 2016, the FASB issued ASU 2016-01, “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.”1, 2023. The amendments require equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee)will be applied prospectively to be measured at fair value with changes in fair value recognized in net income. The new guidance becomes effective for fiscal years beginning after December 15, 2017. The Company does not hold any equity investments in the available-for-sale portfolio that would require reclassification and re-measurement at the adoption date.business combinations subsequent to adoption. The adoption of ASU 2016-01 is2021-08 did not expected to have a material impact toon the Company’s consolidated financial statements.
In February 2016,March 2023, the FASB issued ASU 2016-02, “Leases2023-02, Investments Equity Method and Joint Ventures (Topic 842)”. The new standard establishes a right-of-use (“ROU”) model that requires a lessee323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. These amendments allow reporting entities to record a ROU asset and a lease liability onelect to account for qualifying tax equity investments using the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affectingproportional amortization method, regardless of the pattern of expense recognition inprogram giving rise to the related income statement. The new standardtax credits. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently in the process of evaluating the impact of the pending adoption of the new standard on its consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. ASU 2016-13 becomes effectivepublic business entities for fiscal years andincluding interim periods within those fiscal years, beginning after December 15, 2019.2023. Early adoption is permitted in any interim period. The Company is currently inadopted ASU 2023-02 on January 1, 2024, and the process of evaluating the impact of the pending adoption of the new standard on its consolidated financial statements and is collaborating with a third party advisory team to develop a multi-year implementation plan and methodology in order for the Company to be compliant with ASU 2016-13 by the effective date. The Company has established a CECL committee to oversee the development and implementation of ASU 2016-13. Based on the Company’s initial assessment of the ASU 2016-13, the Company’s expects the new guidance will result in additional required provision and allowance for loan losses which coulddid not have a material impact on itsthe Company’s consolidated financial statements.
Pending Accounting Pronouncements
In August 2016,November 2023, the FASB issued ASU 2016-15, “Statement2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” which expands segment disclosure requirements for public entities. ASU 2023-07 requires disclosure of Cash Flows (Topic 230): Classification of Certain Cash Receiptssignificant segment expenses and Cash Payments.” ASU 2016-15 provides guidance on classification and presentation of certain cash receipts and cash paymentsother segment items on an institution’s statement of cash flows. The amendment aims to reduce the diversity in practice with respects to certain types of cash flows. ASU 2016-15 becomes effective for fiscal yearsannual and interim periods within thoseabout a reportable segment’s profit or loss and assets that are currently required annually. This guidance is effective for public entities for fiscal years beginning after December 15, 2017. The2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption ofis permitted. ASU 2016-152023-07 is not expected to have a material impact on the Company’s consolidated financial statements.
In January 2017,December 2023, the FASB issued ASU 2017-04, “Intangibles: Goodwill2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. ASU 2023-09 requires public business entities to disclose in the rate reconciliation table additional categories of information about federal, state and Other: Simplifyingforeign income taxes and to provide more details about the Test for Goodwill Impairment.” ASU 2017-04 will amend and simplify current goodwill impairment testing to eliminate Step 2 from the current provisions. Under the new guidance, an entity should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the quantitative assessment for a reporting unit to determinereconciling items in some categories if items meet a quantitative impairment test is necessary. ASU 2017-04 should be adoptedthreshold. It also requires all entities to disclose income taxes paid, net of refunds, disaggregated by federal, state and foreign taxes for annual or any interim goodwill impairment tests inperiods and to disaggregate the information by jurisdiction based on a quantitative threshold. This guidance is effective for public business entities for fiscal years beginning after December 15, 2019. The Company is currently in the process of evaluating the impact of the pending adoption of the new standard on its consolidated financial statements.
In March 2017, the FASB issued ASU 2017-08, “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities”. ASU 2017-08 was issued to amend the amortization period for certain callable debt securities held at a premium. ASU 2017-08 shortens the amortization period of premiums on certain purchased

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

callable debt securities to the earliest call date. ASU 2017-08 affect all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium). ASU 2017-08 does not impact securities purchased at a discount, which continue to be amortized to maturity. ASU 2017-08 is effective for annual period beginning after December 15, 2018, including interim periods within those annual periods.2024. Early adoption is permitted in an interim period. If an entity chooses to adopt early, any adjustments should be reflected as of the beginning of the fiscal year that includes the interim period. The adoption offor periods for which financial statements have not yet been issued. ASU 2017-082023-09 is not expected to have a material impact on the Company’s consolidated financial statements.
In November 2017, the FASB issued ASU 2017-14, Income Statement-Reporting Comprehensive Income (Topic 220), “Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 116 and SEC Release No. 33-10403”. ASU 2017-14 was issued to supersede, amend, and add SEC paragraphs to the Codification to reflect the August 2017 issuance of SEC Staff Accounting Bulletin (SAB) 116 and SEC Release No. 33-10403. The SEC staff issued SAB 116 to align its revenue guidance with ASC 606, Revenue from Contracts with Customers. The SEC release says vaccine manufacturers should recognize revenue and provide the disclosures required by ASC 606 when the enumerated vaccines are placed into federal government stockpile programs. The amendments in the ASU have the same effective date and transition requirements as those for ASC 606; however, a registrant should continue referring to the applicable existing SEC guidance until it adopts ASC 606. ASU 2017-14 has the same effective date and transition requirements as ASU 2014-09 and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. For more information, see the Company’s disclosure of ASU 2014-09 above.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.    EQUITY INVESTMENTS

2.MERGERS AND ACQUISITIONS
TerminationEquity investments with readily determinable fair values at December 31, 2023 and 2022, consisted of Acquisitionmutual funds in the amounts of U & I$4.4 million and $4.3 million, respectively, and were included in “Equity investments” on the Consolidated Statements of Financial CorpCondition.
On January 23, 2017,The changes in fair value for equity investments with readily determinable fair values for the years ended December 31, 2023 and 2022, were recorded in other noninterest income and fees as summarized in the table below:
Year Ended December 31,
20232022
(Dollars in thousands)
Net change in fair value recorded during the period on equity investments with readily determinable fair value$60 $(1,917)
Less: Net change in fair value recorded on equity investments sold during the period— (1,354)
Net change in fair value on equity investments with readily determinable fair values held at the end of the period$60 $(563)
At December 31, 2023 and 2022, the Company announcedalso had equity investments without readily determinable fair values which are carried at cost less any determined impairment. The balance of these investments is adjusted for changes in subsequent observable prices. At December 31, 2023, the signingtotal balance of a definitive agreementequity investments without readily determinable fair values included in “Equity investments” on the Consolidated Statements of Financial Condition was $39.4 million, consisting of $370 thousand in correspondent bank stock, $1.0 million in Community Development Financial Institutions (“CDFI”) investments, and plan$38.0 million in Community Reinvestment Act (“CRA”) investments. At December 31, 2022, the total balance of merger (the “U & I Merger Agreement”) with U & I Financial Corporation (“U & I”) pursuant to which U & I would have merged withequity investments without readily determinable fair values was $38.1 million, consisting of $370 thousand in correspondent bank stock, $1.0 million in CDFI investments, and into Hope Bancorp with Hope Bancorp as the surviving corporation. As part of the merger, UniBank, a wholly-owned subsidiary of U & I, would have merged with and into the Bank.$36.7 million in CRA investments.
Subsequently on September 15, 2017, the Company announced the mutual termination of the proposed merger with U & I as the Company was unable to obtain the required regulatory approval. The Mutual Termination Agreement provided, among other things, that each party will bear its own costs and expenses in connection with the terminated transaction, without penalties or termination fees. In connection with the termination, the parties have provided mutual releases from any claims of liability to one another relating to the merger transaction.
Merger with Wilshire Bancorp Inc.
On July 29, 2016, the merger of Wilshire Bancorp Inc. (“Wilshire”) and BBCN Bancorp, Inc. (now Hope Bancorp) was completed. On the same day BBCN changed its name to Hope Bancorp, Inc. and the subsidiary BBCN Bank was changed to Bank of Hope. The Company merged with Wilshire to create the only super regional Korean-American Bank in the United States and to expand our branch network nationwide. Pursuant to the merger agreement, holders of Wilshire common stock received 0.7034 of a share of common stock of HOPEhad no impairments or subsequent observable price changes for each share of Wilshire common stock held immediately prior to the effective time of the merger, rounded to the nearest whole share, plus cash in lieu of the issuance of fractional shares. Outstanding Wilshire stock options and restricted stock awards were converted into stock options with respect to shares of HOPE common stock or restricted shares of HOPE common stock, respectively, with appropriate adjustments to reflect the exchange ratio. The merger was accounted for using the acquisition method of accounting. Accordingly, the assets and liabilities of Wilshire were recorded at their respectiveequity investments without readily determinable fair values for the years ended December 31, 2023 and represents management’s estimates based on available information.2022.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3.    INVESTMENT SECURITIES
The consideration paid, the assets acquired, and the liabilities assumed are summarized in the following table:
 July 29, 2016
 (Dollars in thousands)
Consideration Paid: 
Hope common stock issued in exchange for Wilshire common stock$852,939
Cash paid for fractional shares3
Hope stock options issued in exchange Wilshire stock options3,370
     Total consideration paid$856,312
  
Assets Acquired: 
Cash and cash equivalents$100,127
Investment securities478,938
Loans receivable3,800,807
FRB and FHLB stock16,539
OREO13,173
Premises and equipment16,812
BOLI25,240
Servicing assets16,203
Low income housing tax credit investments47,111
Core deposit intangibles18,138
Deferred tax assets, net17,698
Other assets76,818
Liabilities Assumed: 
Deposits(3,812,367)
Borrowings(206,282)
Subordinated debentures(56,942)
Other liabilities(54,751)
Total identifiable net assets$497,262
Excess of consideration paid over fair value of net assets acquired (goodwill)$359,050
Fair values are primarily determined through the use of inputs that are not observable from market-based information. Under ASC 805-10-25-13, management may adjust the fair values of acquired assets or assumed liabilities for a period of up to one year from the date of the acquisition to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have an effect on the measurement of the amounts recognized as of that date. During the fourth quarter of 2016, the Company made a net adjustment of $1.4 million to the deferred tax assets and taxes receivable acquired from Wilshire which reduced the previous goodwill recorded from the transaction by $1.4 million. Subsequently in the first quarter of 2017, the
Company made an adjustment which increased goodwill by $978 thousand consisting of a $1.7 million adjustment to OREO partially offset by a $716 thousand adjustment to deferred tax assets. During the second quarter of 2017, the Company made an
adjustment of $475 thousand to deferred tax assets which increased goodwill by the same amount.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Acquired Loans
The fair value of loans were estimated on an individual basis based on the characteristics for each loan. A discounted cash flow analysis was used to project cash flows for each loan using assumptions for rate, remaining maturity, prepayment speeds, projected default probabilities, loss given defaults, and estimate of prevailing discount rates. The following table presents loans acquired from Wilshire with deteriorated credit quality as of the date of acquisition included as loans receivable in the table above:
 
Fair Value At
July 29, 2016
 (Dollars in thousands)
Contractually required principal and interest at acquisition$292,380
Contractual cash flows not expected to be collected (nonaccretable discount)(8,002)
Expected cash flows at acquisition284,378
Interest component of expected cash flows (accretable discount)(41,271)
Fair value of acquired impaired loans$243,107
The carrying balance of the acquired loans from Wilshire included in the Statement of Financial Condition at December 31, 2017 was $2.60 billion compared to $3.59 billion at December 31, 2016.
Pro Forma Information
The following table presents financial information regarding the Wilshire’s operations included in the Consolidated Statement of Income from the date of acquisition through December 31, 2016. The table also presents unaudited pro forma information as if the merger had occurred on January 1, 2015. This pro forma information gives effect to certain adjustments, including purchase accounting fair value adjustments, amortization of core deposit and related income tax effects. Merger and integration expenses incurred of $25.7 million and $1.4 million for the years ended December 31, 2016 and 2015, respectively, were excluded. The pro forma information does not necessarily reflect the results of operations that would have occurred had the Company merged with Wilshire at the beginning of 2015. The pro forma combined condensed consolidated financial statements do not take into account the impact, if any, of an ownership change under Section 382 of the Code that would have occurred as of January 1, 2015. The merger is expected to result in annual cost savings to be achieved following the consummation of the merger. These expected savings have not been included in the pro forma combined amounts. These pro forma results require significant estimates and judgments particularly as it relates to the valuation and accretion of income associated with acquired loans.
 
Actual from Acquisition Date Through
December 31,
 
Pro forma
Year Ended December 31,
 2016 2016 2015
 (Dollars in thousands)
Net interest income$197,953
 $456,556
 $449,501
Provision for loan losses6,490
 4,000
 8,700
Non-interest income29,546
 75,266
 89,345
Non-interest expense120,954
 235,013
 255,401
Income tax provision39,828
 $118,613
 $111,581
Net income$60,227
 $174,196
 $163,164
      
Pro forma earnings per share:     
     Basic  $1.29
 $1.21
     Diluted  $1.29
 $1.21



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Acquisition-Related Expenses
The following table presents merger and integration expenses associated with the merger with Wilshire, the terminated merger with U & I, and other previous mergers and acquisitions which were reflected in the Consolidated Statements of Income in merger and integration expense. These expenses are comprised primarily of severance payments, professional services, and other noninterest expense related to prior mergers and acquisitions.
 Year ended December 31,
 2017 2016 2015
 (Dollars in thousands)
Wilshire$1,224
 $16,818
 $1,414
U & I467
 —
 —
Other90
 96
 126
Total merger and integration expenses$1,781
 $16,914
 $1,540

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3.SECURITIES AVAILABLE FOR SALE
The following is a summary of investment securities available-for-saleas of the dates indicated:

 December 31, 2023December 31, 2022
 Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses
Fair
Value		Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
 (Dollars in thousands)
Debt securities AFS:
U.S. Treasury securities$103,691 $21 $(35)$103,677 $3,990 $— $(104)$3,886 
U.S. Government agency and U.S. Government sponsored enterprises:
Agency securities4,000 — (100)3,900 4,000 — (133)3,867 
CMOs888,631 367 (141,279)747,719 947,541 — (153,842)793,699 
MBS:
Residential499,431 — (79,133)420,298 544,084 — (90,907)453,177 
Commercial445,207 113 (53,432)391,888 417,241 — (48,954)368,287 
Asset-backed securities150,992 — (1,322)149,670 153,539 — (5,935)147,604 
Corporate securities23,302 — (3,868)19,434 23,351 — (4,494)18,857 
Municipal securities314,554 5,698 (11,779)308,473 195,675 790 (13,713)182,752 
Total investment securities AFS$2,429,808 $6,199 $(290,948)$2,145,059 $2,289,421 $790 $(318,082)$1,972,129 
Debt securities HTM:
U.S. Government agency and U.S. Government sponsored enterprises:
MBS:
Residential$150,369 $— $(6,663)$143,706 $157,881 $— $(7,041)$150,840 
Commercial113,543 — (6,731)106,812 113,185 1 (5,619)107,567 
Total investment securities HTM$263,912 $— $(13,394)$250,518 $271,066 $1 $(12,660)$258,407 
Accrued interest receivable for investment debt securities at December 31, 20172023 and 2016:2022, totaled $11.0 million and $7.8 million, respectively.
 December 31, 2017
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 (Dollars in thousands)
Debt securities:      

U.S. Government agency and U.S.
  Government sponsored enterprises:
       
Collateralized mortgage obligations$856,193
 $58
 $(17,542) $838,709
Mortgage-backed securities:       
Residential477,676
 521
 (6,983) 471,214
Commercial308,046
 —
 (6,681) 301,365
Corporate securities4,997
 —
 (522) 4,475
Municipal securities82,542
 870
 (875) 82,537
Total debt securities1,729,454
 1,449
 (32,603) 1,698,300
Mutual funds22,425
 17
 (485) 21,957
Total$1,751,879
 $1,466
 $(33,088) $1,720,257
        
        
 December 31, 2016
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 (Dollars in thousands)
Debt securities:       
U.S. Government agency and U.S.
  Government sponsored enterprises:
       
Agency securities$12,005
 $3
 $—
 $12,008
Collateralized mortgage obligations715,981
 349
 (10,663) 705,667
Mortgage-backed securities:       
Residential611,201
 1,132
 (9,381) 602,952
Commercial130,103
 —
 (5,014) 125,089
Corporate securities11,576
 —
 (449) 11,127
Municipal securities88,018
 358
 (1,537) 86,839
Total debt securities1,568,884
 1,842
 (27,044) 1,543,682
Mutual funds13,425
 —
 (367) 13,058
Total$1,582,309
 $1,842
 $(27,411) $1,556,740
        
As of At December 31, 20172023 and December 31, 2016,2022, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.

At December 31, 2023 and 2022, $200.2 million and $223.1 million in unrealized losses on investment securities AFS, net of taxes, respectively, were included in AOCI. For the years ended December 31, 2023, 2022 and 2021, there were no reclassifications out of AOCI into earnings as there were no sales of investments securities AFS.
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The following table presents a breakdown of interest income recorded for investment securities that are taxable and nontaxable.
The proceeds from sales of securities and total gains and losses are listed below:
 Year ended December 31,
 2017 2016 2015
 (Dollars in thousands)
Proceeds from investments sold$128,791
 $217,079
 $22,510
      
Gains from sales of securities402
 1,032
 437
Losses from sales of securities(101) (84) (13)
Gains from called securities—
 2
 —
Net gain on sales or called securities$301
 $950
 $424

 Year Ended December 31,
 202320222021
 (Dollars in thousands)
Interest income on investment securities
Taxable$61,696 $50,043 $34,583 
Nontaxable4,367 2,177 909 
Total$66,063 $52,220 $35,492 
The amortized cost and estimated fair value of investment securities at December 31, 2017,2023, by contractual maturity, are shownpresented in the table below. Collateralized mortgage obligations, mortgage-backed securities, and asset-backed securities are presented by final maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.
Available for SaleHeld to Maturity
Amortized
Cost		Estimated
Fair Value		Amortized
Cost		Estimated
Fair Value
 (Dollars in thousands)
Debt securities:
Due within one year$103,691 $103,677 $— $— 
Due after one year through five years158,504 149,926 25,586 24,968 
Due after five years through ten years103,301 93,934 8,634 8,317 
Due after ten years2,064,312 1,797,522 229,692 217,233 
Total$2,429,808 $2,145,059 $263,912 $250,518 
 December 31, 2017
 
Amortized
Cost
 
Estimated
Fair Value
 (Dollars in thousands)
Available for sale:   
Due within one year$—
 $—
Due after one year through five years11,541
 11,729
Due after five years through ten years33,106
 33,581
Due after ten years42,892
 41,702
U.S. Government agency and U.S. Government sponsored enterprises   
Collateralized mortgage obligations856,193
 838,709
Mortgage-backed securities:   
Residential477,676
 471,214
Commercial308,046
 301,365
Mutual funds22,425
 21,957
Total$1,751,879
 $1,720,257

Securities with carrying values of approximately $359.2$1.70 billion and $360.7 million and $382.1 million at December 31, 20172023 and December 31, 2016,2022, respectively, were pledged to secure public deposits, for various borrowings, and for other purposes as required or permitted by law.

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Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Securities withThe following tables show the Company’s investments’ gross unrealized losses and estimated fair values, aggregated by investment category and the length of time that the individual securities have been in a continuous unrealized loss position as of the dates indicated, are as follows:
 December 31, 2017
 Less than 12 months 12 months or longer Total
Description of
Securities
Number 
of
Securities
 Fair Value 
Gross
Unrealized
Losses
 
Number of
Securities
 Fair Value 
Gross
Unrealized
Losses
 
Number 
of
Securities
 Fair Value 
Gross
Unrealized
Losses
  (Dollars in thousands)
Collateralized mortgage obligations38
 $425,198
 $(5,954) 53
 $408,526
 $(11,588) 91
 $833,724
 $(17,542)
Mortgage-backed securities:                 
Residential20
 195,086
 (1,282) 23
 230,616
 (5,701) 43
 425,702
 (6,983)
Commercial16
 186,357
 (1,614) 8
 115,008
 (5,067) 24
 301,365
 (6,681)
Corporate securities1
 4,475
 (522) —
 —
 —
 1
 4,475
 (522)
Municipal securities18
 9,295
 (69) 3
 22,144
 (806) 21
 31,439
 (875)
Mutual funds1
 8,899
 (101) 3
 11,579
 (384) 4
 20,478
 (485)
Total94
 $829,310
 $(9,542) 90
 $787,873
 $(23,546) 184
 $1,617,183
 $(33,088)
 December 31, 2016
 Less than 12 months 12 months or longer Total
Description of
Securities
Number of
Securities
 Fair Value 
Gross
Unrealized
Losses
 
Number of
Securities
 Fair Value 
Gross
Unrealized
Losses
 
Number of
Securities
 Fair Value 
Gross
Unrealized
Losses
  (Dollars in thousands)
Collateralized mortgage obligations66
 $615,803
 $(9,459) 4
 $36,333
 $(1,204) 70
 $652,136
 $(10,663)
Mortgage-backed securities:                 
Residential49
 497,708
 (9,381) —
 —
 —
 49
 497,708
 (9,381)
Commercial8
 125,089
 (5,014) —
 —
 —
 8
 125,089
 (5,014)
Corporate securities1
 7,014
 (2) 1
 4,113
 (447) 2
 11,127
 (449)
Municipal securities95
 69,331
 (1,537) —
 —
 —
 95
 69,331
 (1,537)
Mutual funds3
 13,058
 (367) —
 —
 —
 3
 13,058
 (367)
Total222
 $1,328,003
 $(25,760) 5
 $40,446
 $(1,651) 227
 $1,368,449
 $(27,411)
indicated. The Company evaluates securities for OTTI on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the financial condition and near-term prospects of the issuer, the length of time andthat the extent to which the fair value of theindividual securities hashave been less than our cost for the securities, and management’s intention to sell, or whether it is more likely than not that management will be required to sell,in a security in ancontinuous unrealized loss position before recovery of its amortized cost basis. In analyzing an issuer’s financial condition, the Company considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition.is not a factor in determining credit impairment.    
The Company has certain collateralized mortgage obligations, mortgage-backed securities, municipal securities, and mutual funds that were in a continuous loss position for twelve months or longer as of December 31, 2017. Municipal securities in a continuous loss position for twelve months or longer had an unrealized losses of $806 thousand at December 31, 2017 with the last of the securities scheduled to mature in November 2046. These securities were rated investment grade and there were no credit quality concerns with the obligator. Mutual funds in a continuous loss position for twelve months or longer had an unrealized losses of $384 thousand, however there were no credit quality concerns with the fund. Collateralized mortgage obligations, residential and commercial mortgage-backed securities in a continuous loss position for twelve months or longer had an unrealized losses of $11.6 million, $5.7 million, and $5.1 million, respectively at December 31, 2017. These securities were investments in
December 31, 2023
Less than 12 months12 months or longerTotal
Description of
Securities AFS		Number 
of
Securities		Fair 
Value		Gross
Unrealized
Losses		Number 
of
Securities		Fair 
Value		Gross
Unrealized
Losses		Number 
of
Securities		Fair 
Value		Gross
Unrealized
Losses
  (Dollars in thousands)
U.S. Treasury securities— $— $— 1 $3,963 $(35)1 $3,963 $(35)
U.S. Government agency and U.S. Government sponsored enterprises:
Agency securities— — — 1 3,900 (100)1 3,900 (100)
CMOs3 19,800 (378)115 717,662 (140,901)118 737,462 (141,279)
MBS:
Residential— — — 65 420,298 (79,133)65 420,298 (79,133)
Commercial6 53,255 (2,129)53 331,450 (51,303)59 384,705 (53,432)
Asset-backed securities— — — 18 149,670 (1,322)18 149,670 (1,322)
Corporate securities— — — 6 19,434 (3,868)6 19,434 (3,868)
Municipal securities11 42,760 (263)42 91,707 (11,516)53 134,467 (11,779)
Total20 $115,815 $(2,770)301 $1,738,084 $(288,178)321 $1,853,899 $(290,948)



December 31, 2022
Less than 12 months12 months or longerTotal
Description of
Securities AFS		Number 
of
Securities		Fair 
Value		Gross
Unrealized
Losses		Number 
of
Securities		Fair 
Value		Gross
Unrealized
Losses		Number 
of
Securities		Fair 
Value		Gross
Unrealized
Losses
  (Dollars in thousands)
U.S. Treasury securities1 $3,886 $(104)— $— $— 1 $3,886 $(104)
U.S. Government agency and U.S. Government sponsored enterprises:
Agency securities1 3,867 (133)— — — 1 3,867 (133)
CMOs61 150,419 (14,888)59 643,280 (138,954)120 793,699 (153,842)
MBS:— — — 
Residential23 55,645 (5,616)42 397,532 (85,291)65 453,177 (90,907)
Commercial29 172,963 (12,156)26 195,324 (36,798)55 368,287 (48,954)
Asset-backed securities3 21,836 (716)15 125,768 (5,219)18 147,604 (5,935)
Corporate securities1 3,401 (600)5 15,456 (3,894)6 18,857 (4,494)
Municipal securities31 76,942 (3,207)32 65,730 (10,506)63 142,672 (13,713)
Total150 $488,959 $(37,420)179 $1,443,090 $(280,662)329 $1,932,049 $(318,082)
F-28
F-23

Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company had U.S. Treasury securities, agency securities, collateralized mortgage obligations, mortgage-backed, asset-backed, corporate, and municipal securities classified as AFS that were in a continuous loss position for twelve months or longer at December 31, 2023. The collateralized mortgage obligations and mortgage-backed securities were investments in U.S. Government agency and U.S. Government sponsored enterprises and havehad high credit ratings (“AA” grade or better). The interest on theasset-backed, corporate, and municipal securities that were in an unrealized loss position havehas been paid as agreed, and managementthe Company believes this will continue in the future and that the securities will be paid in full as scheduled. The market value declines are deemed to befor these securities were primarily due to the current market volatilitymovements in interest rates and arewere not reflective of management’s expectations of the Company’s ability to fully recover the investments,any unrealized losses, which may be at maturity. For these reasons, no OTTI was recognized onWith the adoption of CECL, the length of time that the fair value of investment securities has been less than amortized cost is not considered when assessing for credit impairment.
80.2% of the Company’s investment portfolio at December 31, 2023, consisted of securities that were issued by U.S. Government agency and U.S. Government sponsored enterprises. Although a government guarantee exists on securities issued by U.S. Government sponsored agencies, these entities are not legally backed by the full faith and credit of the federal government, and the current support is subject to a cap as part of the Housing and Economic Recovery Act of 2008. Nonetheless, at this time the Company does not foresee any set of circumstances in which the government would not fund its commitments on these investments as the issuers are an integral part of the U.S. housing market in providing liquidity and stability. Therefore, the Company concluded that a continuous loss positionzero allowance approach for twelve months or longer at December 31, 2017.
these investments was appropriate. The Company considers the losses on our investmentsalso had 18 asset-backed securities, six corporate securities, and 53 municipal bonds in unrealized loss positions at December 31, 20172023.
Allowance for Credit Losses on Securities AFS—The Company evaluates investment securities AFS in unrealized loss positions for impairment related to be temporary based on: 1)credit losses on at least a quarterly basis. Investment securities AFS in unrealized loss positions are first assessed as to whether the likelihood of recovery; 2) the information relative to the extent and duration of the decline in market value; and 3) the Company’s intention notCompany intends to sell, and management’s determination thator if it is more likely than not that the Company will not be required to sell athe security in an unrealized loss position before recovery of its amortized cost basis. The increase in the net unrealized loss position can be attributed to an increase in long term Treasury yields as a resultIf one of the increasecriteria is met, the security’s amortized cost basis is written down to fair value through earnings. For securities that do not meet these criteria, the Company evaluates whether the decline in interest ratesfair value resulted from credit losses or other factors. In evaluating whether a credit loss exists, the Company has set up an initial quantitative filter for impairment triggers. Once the quantitative filter has been triggered, a security is placed on a watch list and an additional assessment is performed to identify whether a credit impairment exists. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security and the issuer, among other factors. If this assessment indicates that a credit loss exists, the Company compares the present value of cash flows expected to be collected from the security with the amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Unrealized losses that have not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes. The Company did not have an allowance for credit losses on investment securities AFS at December 31, 2017, compared2023 and 2022.
Allowance for Credit Losses on Securities HTM—For each major HTM debt security type, the allowance for credit losses is estimated collectively for groups of securities with similar risk characteristics. For securities that do not share similar risk characteristics, the losses are estimated individually. Debt securities that are issued by a U.S. government or government-sponsored enterprises are highly rated by major rating agencies, and have a long history of no credit losses. Therefore, the Company applies a zero credit loss assumption on these investments. Any expected credit loss is recorded through the allowance for credit losses on investment securities HTM and deducted from the amortized cost basis of the security, so that the balance sheet reflects the net amount the Company expects to ratescollect. At December 31, 2023, all of the Company’s investment securities HTM were issued by a U.S. government agency or government-sponsored enterprise. The Company did not have an allowance for credit losses on investment securities HTM at December 31, 2016.

2023.
F-29
F-24

Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4.    LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES

4.LOANS RECEIVABLE AND THE ALLOWANCE FOR LOAN LOSSES
The following is a summary of loans receivable by major category at December 31, 2017 and 2016:segment:
December 31,
20232022
(Dollars in thousands)
Loan portfolio composition
CRE loans$8,797,884 $9,414,580 
C&I loans4,135,044 5,109,532 
Residential mortgage loans883,687 846,080 
Consumer and other loans37,004 33,348 
Total loans receivable, net of deferred costs and fees13,853,619 15,403,540 
Allowance for credit losses(158,694)(162,359)
Loans receivable, net of allowance for credit losses$13,694,925 $15,241,181 
 December 31, 2017 December 31, 2016
Loan portfolio composition(Dollars in thousands)
Real estate loans:   
Residential$49,774
 $57,884
Commercial & industrial8,142,036
 7,842,573
Construction316,412
 254,113
Total real estate loans8,508,222
 8,154,570
Commercial business1,780,869
 1,832,021
Trade finance166,664
 154,928
Consumer and other647,102
 403,470
Total loans outstanding11,102,857
 10,544,989
Deferred loan fees, net(282) (1,657)
Gross loans receivable11,102,575
 10,543,332
Allowance for loan losses(84,541) (79,343)
Loans receivable, net$11,018,034
 $10,463,989
OurThe loan portfolio is made upconsists of four segments: real estateCRE loans, commercial business, trade financeC&I loans, residential mortgage loans, and consumer and other loans. These segmentsCRE loans are further segregated betweenextended for the purchase and refinance of commercial real estate and generally secured by first deeds of trust and are collateralized by residential or commercial properties. C&I loans accountedare loans provided to businesses for under the amortized cost method ("Legacy Loans")various purposes such as working capital, purchasing inventory, debt refinancing, business acquisitions, international trade finance activities, and acquiredother business related financing needs, and also includes SBA loans. The Company fully exited its residential mortgage warehouse line business in 2023. Residential mortgage loans that were originally recorded at fair value with no carryoverare extended for personal, family, or household use and are secured by a mortgage or deed of the related pre-acquisition allowance for loan losses ("Acquired Loans"). The Acquired Loans are further segregated between Purchased Credit Impaired Loans (loans withtrust. Consumer and other loans consist of home equity, credit deterioration on the acquisition datecard, and accounted for under ASC 310-30, or "PCI loans") and Acquired Performing Loans (loans that were pass graded on the acquisition date and the fair value adjustment is amortized over the contractual life under ASC 310-20, or "non-PCI loans").other personal loans.
The following table presents changesCompany had $3.4 million in loans held for sale at December 31, 2023, compared with $49.2 million at December 31, 2022. Loans held for sale at December 31, 2023, consisted of $1.1 million in residential mortgage loans and $2.3 million in CRE loans, compared with $450 thousand in residential mortgage loans, and $48.8 million in CRE loans at December 31, 2022. Loans held for sale are not included in the accretable discount on the PCI loans for the years ended December 31, 2017 and 2016:receivable table presented above.

F-25
 Year ended December 31,
 2017 2016
 (Dollars in thousands)
Balance at beginning of period$43,611
 $23,777
Additions due to mergers and acquisitions—
 41,271
Accretion(21,542) (15,817)
Increase (decrease) in expected cash flows32,933
 (5,620)
Balance at end of period$55,002
 $43,611

On the acquisition date, the amount by which the undiscounted expected cash flows exceed the estimated fair value of the PCI loans is the accretable yield. The accretable yield is then measured at each financial reporting date and represents the difference between the remaining undiscounted expected cash flows and the current carrying value of the loans. The accretable yield may change from period to period due to the following: 1) estimates of the remaining life of acquired loans will affect the amount of future interest income, 2) indices for variable rates of interest on PCI loans may change; and 3) estimates of the amount of the contractual principal and interest that will not be collected (nonaccretable difference) may change.


F-30
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables below detail the activity in the allowance for loancredit losses (“ACL”) by portfolio segment for the years ended December 31, 2023 and 2022, and 2021. Charge offs for the year ended December 31, 2017 and 2016:2023, included an idiosyncratic full charge off of $23.4 million related to a borrower that entered into Chapter 7 liquidation in August 2023. Recoveries for the year 2022 included $17.3 million in recoveries from a single lending relationship that had $29.6 million in charge offs during the year 2021. Charge offs for the year 2021 also included $26.2 million in charge offs related to the sale of $275.3 million in loans with elevated credit risk.
CRE LoansC&I LoansResidential Mortgage LoansConsumer and Other LoansTotal
(Dollars in thousands)
December 31, 2023
Balance, beginning of period$95,884 $56,872 $8,920 $683 $162,359 
ASU 2022-02 day 1 adoption adjustment19 (426)— — (407)
Provision (credit) for credit losses(2,301)27,233 3,918 250 29,100 
Loans charged off(2,947)(34,203)— (370)(37,520)
Recoveries of charge offs3,285 1,815 — 62 5,162 
Balance, end of period$93,940 $51,291 $12,838 $625 $158,694 
December 31, 2022
Balance, beginning of period$108,440 $27,811 $3,316 $983 $140,550 
Provision (credit) for credit losses(27,451)31,360 5,626 65 9,600 
Loans charged off(6,803)(5,160)(22)(404)(12,389)
Recoveries of charge offs21,698 2,861 — 39 24,598 
Balance, end of period$95,884 $56,872 $8,920 $683 $162,359 
December 31, 2021
Balance, beginning of period$162,196 $39,155 $4,227 $1,163 $206,741 
Provision (credit) for credit losses(2,051)(9,982)12 (179)(12,200)
Loans charged off(57,427)(3,558)(923)(328)(62,236)
Recoveries of charge offs5,722 2,196 — 327 8,245 
Balance, end of period$108,440 $27,811 $3,316 $983 $140,550 
 Legacy Acquired Total
 Real Estate Commercial Business Trade Finance Consumer and Other Real Estate Commercial Business Trade Finance Consumer and Other 
 (Dollars in thousands)
December 31, 2017                 
Balance, beginning of period$38,956
 $23,430
 $1,897
 $2,116
 $12,791
 $117
 $—
 $36
 $79,343
Provision (credit) for loan losses8,524
 (1,036) 1,825
 2,207
 1,341
 4,500
 42
 (43) 17,360
Loans charged off(2,292) (9,881) (2,104) (943) (850) (1,315) —
 (25) (17,410)
Recoveries of charge offs172
 4,715
 56
 5
 40
 225
 —
 35
 5,248
Balance, end of period$45,360
 $17,228
 $1,674
 $3,385
 $13,322
 $3,527
 $42
 $3
 $84,541
                  
December 31, 2016                 
Balance, beginning of period$42,829
 $16,332
 $3,592
 $556
 $12,823
 $214
 $—
 $62
 $76,408
Provision (credit) for loan losses(4,896) 12,928
 (1,695) 2,229
 714
 (248) —
 (32) 9,000
Loans charged off(152) (7,267) —
 (757) (758) (26) —
 —
 (8,960)
Recoveries of charge offs1,175
 1,437
 —
 88
 12
 177
 —
 6
 2,895
Balance, end of period$38,956
 $23,430
 $1,897
 $2,116
 $12,791
 $117
 $—
 $36
 $79,343
                  
December 31, 2015                 
Balance, beginning of period$38,775
 $15,986
 $3,456
 $427
 $8,573
 $485
 $—
 $56
 $67,758
Provision (credit) for loan losses2,828
 (577) 1,424
 177
 4,270
 (117) —
 (5) 8,000
Loans charged off(558) (1,971) (1,288) (630) (183) (271) —
 (11) (4,912)
Recoveries of charged offs1,784
 2,894
 —
 582
 163
 117
 —
 22
 5,562
Balance, end of period$42,829
 $16,332
 $3,592
 $556
 $12,823
 $214
 $—
 $62
 $76,408
The following tables disaggregatebreak out the allowance for loancredit losses and the carrying value of loans receivablesloan balance by impairmentmeasurement methodology at December 31, 20172023 and December 31, 2016:2022:
December 31, 2023
CRE LoansC&I LoansResidential Mortgage LoansConsumer and Other LoansTotal
(Dollars in thousands)
Allowance for credit losses:
Individually evaluated$886 $1,721 $39 $14 $2,660 
Collectively evaluated93,054 49,570 12,799 611 156,034 
Total$93,940 $51,291 $12,838 $625 $158,694 
Loans outstanding:
Individually evaluated$33,932 $5,013 $5,916 $343 $45,204 
Collectively evaluated8,763,952 4,130,031 877,771 36,661 13,808,415 
Total$8,797,884 $4,135,044 $883,687 $37,004 $13,853,619 
F-26
 December 31, 2017
 Legacy Acquired Total
 Real Estate Commercial Business Trade Finance Consumer and Other Real Estate Commercial Business Trade Finance Consumer and Other 
 (Dollars in thousands)
Allowance for loan losses:
Individually evaluated for impairment$1,378
 $2,807
 $3
 $35
 $246
 $854
 $—
 $—
 $5,323
Collectively evaluated for impairment43,982
 14,421
 1,671
 3,350
 1,036
 2,673
 42
 3
 67,178
PCI loans—
 —
 —
 —
 12,040
 —
 —
 —
 12,040
Total$45,360
 $17,228
 $1,674
 $3,385
 $13,322
 $3,527
 $42
 $3
 $84,541
                  
Loans outstanding:                 
Individually evaluated for impairment$41,041
 $31,322
 $3,951
 $908
 $14,239
 $18,733
 $2,984
 $1,171
 $114,349
Collectively evaluated for impairment6,172,448
 1,459,273
 152,204
 477,375
 2,120,001
 244,980
 7,525
 157,794
 10,791,600
PCI loans—
 —
 —
 —
 160,493
 26,561
 —
 9,854
 196,908
Total$6,213,489
 $1,490,595
 $156,155
 $478,283
 $2,294,733
 $290,274
 $10,509
 $168,819
 $11,102,857


F-31
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2022
CRE LoansC&I LoansResidential Mortgage LoansConsumer and Other LoansTotal
(Dollars in thousands)
Allowance for credit losses:
Individually evaluated$870 $2,941 $24 $21 $3,856 
Collectively evaluated95,014 53,931 8,896 662 158,503 
Total$95,884 $56,872 $8,920 $683 $162,359 
Loans outstanding:
Individually evaluated$43,461 $12,477 $9,775 $436 $66,149 
Collectively evaluated9,371,119 5,097,055 836,305 32,912 15,337,391 
Total$9,414,580 $5,109,532 $846,080 $33,348 $15,403,540 
The ACL represents management’s best estimate of future lifetime expected losses on its held for investment loan portfolio. The Company calculates its ACL by estimating expected credit losses on a collective basis for loans that share similar risk characteristics. Loans that do not share similar risk characteristics with other loans are evaluated for credit losses on an individual basis. The Company uses a combination of a modeled and non-modeled approach that incorporates current and future economic conditions to estimate lifetime expected losses on a collective basis.
 December 31, 2016
 Legacy Acquired Total
 Real Estate Commercial Business Trade Finance Consumer and Other Real Estate Commercial Business Trade Finance Consumer and Other 
 (Dollars in thousands)
Allowance for loan losses:
Individually evaluated for impairment$1,889
 $4,420
 $864
 $50
 $113
 $73
 $—
 $—
 $7,409
Collectively evaluated for impairment37,067
 19,010
 1,033
 2,066
 548
 44
 —
 36
 59,804
PCI loans—
 —
 —
 —
 12,130
 —
 —
 —
 12,130
Total$38,956
 $23,430
 $1,897
 $2,116
 $12,791
 $117
 $—
 $36
 $79,343
                  
Loans outstanding:                 
Individually evaluated for impairment$74,085
 $34,783
 $6,029
 $733
 $23,865
 $435
 $—
 $431
 $140,361
Collectively evaluated for impairment5,271,262
 1,079,348
 75,365
 179,961
 2,597,200
 650,710
 70,535
 206,802
 10,131,183
PCI loans—
 —
 —
 —
 188,158
 66,745
 2,999
 15,543
 273,445
Total$5,345,347
 $1,114,131
 $81,394
 $180,694
 $2,809,223
 $717,890
 $73,534
 $222,776
 $10,544,989
AsThe Company uses Probability of December 31, 2017Default (“PD”), Loss Given Default (“LGD”), and December 31, 2016,Exposure at Default (“EAD”) methodologies with quantitative factors and qualitative considerations in calculation of the allowance for unfunded commitments was $836 thousandcredit losses for collectively assessed loans. The Company uses a reasonable and $3.2 million, respectively. Forsupportable period of 2 years at which point loss assumptions revert back to historical loss information by means of 1 year reversion period. The Company utilizes a baseline forecast scenario published by a third party that incorporates macroeconomic variables including GDP, unemployment rates, interest rates, and commercial real estate prices to project an economic outlook. The forecast scenario is utilized to estimate losses during the reasonable and supportable period. Changes in these assumptions and forecasts could significantly affect the Company’s estimate of future credit losses. See Note 1 “Significant Accounting Policies” for further discussion of the Company’s ACL methodology.
The decrease in ACL for the year ended December 31, 20172023 compared with December 31, 2022, was largely due to the year-over-year decrease in loan balances in 2023. Both ACL for individually evaluated loans and 2016,collectively evaluated loans decreased year-over-year from December 31, 2022 to December 31, 2023.
The Company maintains a separate ACL for its off-balance sheet unfunded loan commitments. The Company uses a funding rate to allocate the recognized (credit) provisionallowance to undrawn exposures. This funding rate is used as a credit conversion factor to capture how much undrawn can potentially become drawn at any point. The funding rate is determined based on a lookback period of 8 quarters. Credit loss is not estimated for off-balance sheet credit losses relatedexposures that are unconditionally cancellable by the Company.
At December 31, 2023 and 2022, reserves for unfunded loan commitments recorded in other liabilities were $3.8 million and $1.4 million, respectively. For the years ended December 31, 2023 and 2022, the Company recorded additions to reserves for unfunded commitments was $(2.4)in credit related expenses totaling $2.5 million and $179$250 thousand,. respectively.
The recorded investment in individually impaired loans was as follows:
F-27
 December 31, 2017 December 31, 2016
 (Dollars in thousands)
With allocated allowance:   
Without charge-off$28,614
 $59,638
With charge-off3,044
 1,120
With no allocated allowance:   
Without charge-off77,533
 76,775
With charge-off5,158
 2,828
Allowance on impaired loans(5,323) (7,409)
Impaired loans, net of allowance$109,026
 $132,952



F-32
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Generally, loans are placed on nonaccrual status if principal and/or interest payments become 90 days or more past due and/or management deems the collectability of the principal and/or interest to be in question, as well as when required by regulatory requirements. Loans to customers whose financial conditions have deteriorated are considered for nonaccrual status whether or not the loan is 90 days or more past due. Generally, payments received on nonaccrual loans are recorded as principal reductions. Loans are returned to accrual status only when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The Company does not recognize interest income while loans are on nonaccrual status.
The tables below represent the amortized cost of nonaccrual loans, as well as loans past due 90 days or more and still on accrual status, by loan segment and broken out by loans with a recorded ACL and those without a recorded ACL at December 31, 2023 and 2022.
December 31, 2023
Nonaccrual with No ACLNonaccrual with an ACL
Total Nonaccrual (1)
Accruing Loans Past Due 90 Days or More
(Dollars in thousands)
CRE loans$26,724 $7,208 $33,932 $— 
C&I loans2,447 2,566 5,013 184 
Residential mortgage loans3,002 2,914 5,916 — 
Consumer and other loans— 343 343 77 
Total$32,173 $13,031 $45,204 $261 
December 31, 2022
Nonaccrual with No ACLNonaccrual with an ACL
Total Nonaccrual (1)
Accruing Loans Past Due 90 Days or More
(Dollars in thousands)
CRE loans$29,782 $4,133 33,915 $— 
C&I loans1,618 4,002 5,620 336 
Residential mortgage loans5,959 3,816 9,775 — 
Consumer and other loans— 377 377 65 
Total$37,359 $12,328 $49,687 $401 

(1)    Total nonaccrual loans exclude the guaranteed portion of SBA loans that are in liquidation totaling $11.4 million and $9.8 million, at December 31, 2023 and 2022, respectively.
The following tables detail impairedtable presents the amortized cost of collateral-dependent loans (Total Impaired Loans including Legacyat December 31, 2023 and Acquired2022:
December 31, 2023December 31, 2022
Real Estate CollateralOther CollateralTotalReal Estate CollateralOther CollateralTotal
(Dollars in thousands)
CRE loans$29,803 $— $29,803 $35,523 $— $35,523 
C&I loans2,447 1,708 4,155 1,618 2,743 4,361 
Residential mortgage loans3,002 — 3,002 5,959 — 5,959 
Consumer and other loans— — — — — — 
Total$35,252 $1,708 $36,960 $43,100 $2,743 $45,843 
Collateral on loans is a significant portion of what secures collateral-dependent loans and Acquired only) by portfolio segment. Loans with no related allowance for loan losses are believed by managementsignificant changes to have adequatethe fair value of the collateral securing their carrying value. The Company did not recognize any cash basis interest income forcan potentially impact ACL. During the years ended December 31, 20172023 and 2022, the Company did not have any significant changes to the extent to which collateral secured its collateral-dependent loans due to general deterioration or 2016.from other factors. Real estate collateral securing CRE and C&I loans consisted of commercial real estate properties including hotel/motel, building, office, gas station/carwash, warehouse, and residential mortgage properties.
F-28
  December 31, 2017 Year Ended December 31, 2017
Total Impaired Loans Recorded Investment* Unpaid Contractual Principal Balance 
Related
Allowance
 
Average
Recorded Investment*
 Interest Income Recognized during Impairment
  (Dollars in thousands)
With Related Allowance:          
Real Estate—Residential $—
 $—
 $—
 $—
 $—
Real Estate—Commercial          
Retail 532
 531
 131
 1,120
 —
Hotel & Motel 2,931
 5,090
 284
 4,050
 67
Gas Station & Car Wash —
 —
 —
 43
 —
Mixed Use 312
 958
 4
 245
 6
Industrial & Warehouse 772
 1,482
 96
 1,135
 —
Other 4,397
 4,401
 1,109
 11,707
 237
Real Estate—Construction —
 —
 —
 —
 —
Commercial Business 18,330
 22,757
 3,661
 23,695
 631
Trade Finance 3,861
 3,861
 3
 2,842
 217
Consumer and Other 523
 524
 35
 240
 4
Subtotal $31,658
 $39,604
 $5,323
 $45,077
 $1,162
With No Related Allowance:          
Real Estate—Residential $—
 $—
 $—
 $1,105
 $—
Real Estate—Commercial          
Retail 11,792
 13,923
 —
 12,288
 434
Hotel & Motel 2,841
 5,288
 —
 7,245
 —
Gas Station & Car Wash 591
 1,764
 —
 3,168
 —
Mixed Use 1,101
 3,490
 —
 3,496
 —
Industrial & Warehouse 8,429
 8,525
 —
 8,676
 262
Other 20,282
 24,412
 —
 17,116
 608
Real Estate—Construction 1,300
 1,441
 —
 1,611
 —
Commercial Business 31,725
 33,207
 —
 16,312
 697
Trade Finance 3,074
 3,091
 —
 2,994
 253
Consumer and Other 1,556
 1,676
 —
 1,225
 25
Subtotal $82,691
 $96,817
 $—
 $75,236
 $2,279
Total $114,349
 $136,421
 $5,323
 $120,313
 $3,441

*Unpaid contractual principal balance less charge-offs, interest applied to principal and purchase discounts.






F-33
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accrued interest receivable on loans totaled $49.3 million at December 31, 2023, and $47.3 million at December 31, 2022. The following table presents interest income reversals, due to loans being placed on nonaccrual status, by loan segment for the years ended December 31, 2023 and 2022:
Year Ended December 31,
202320222021
(Dollars in thousands)
CRE loans$1,761 $1,906 $3,102 
C&I loans1,127 307 62 
Residential mortgage loans40 309 17 
Consumer and other loans— 1 3 
Total$2,928 $2,523 $3,184 
The following table presents the amortized cost of past due loans, including nonaccrual loans past due 30 days or more, by the number of days past due at December 31, 2023 and 2022, by loan segment:
 December 31, 2023December 31, 2022
 30-59 Days
Past Due 		60-89 Days 
Past Due		90 or More Days
Past Due 		Total
Past Due		30-59 Days
Past Due 		60-89 Days 
Past Due		90 or More Days
Past Due 		Total
Past Due
(Dollars in thousands)
CRE loans$1,999 $2,976 $10,197 $15,172 $2,292 $2,727 $5,694 $10,713 
C&I loans934 533 1,717 3,184 3,258 18 2,137 5,413 
Residential mortgage loans1,534 — 2,339 3,873 2,310 — 5,106 7,416 
Consumer and other loans214 48 77 339 617 44 308 969 
Total Past Due$4,681 $3,557 $14,330 $22,568 $8,477 $2,789 $13,245 $24,511 
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including, but not limited to, current financial information, historical payment experience, credit documentation, public information, and current economic trends. Homogeneous loans (i.e., home mortgage loans, home equity lines of credit, overdraft loans, express business loans, and automobile loans) are not risk rated and credit risk is analyzed largely by the number of days past due. This analysis is performed at least on a quarterly basis.

F-29
  December 31, 2017 Year Ended December 31, 2017
Impaired acquired loans Recorded Investment* 
Unpaid
Contractual Principal
Balance
 
Related
Allowance
 
Average
Recorded Investment*
 Interest Income Recognized during Impairment
  (Dollars in thousands)
With Related Allowance:          
Real Estate—Residential $—
 $—
 $—
 $—
 $—
Real Estate—Commercial          
Retail 262
 261
 126
 851
 —
Hotel & Motel 85
 86
 2
 105
 —
Gas Station & Car Wash —
 —
 —
 —
 —
Mixed Use 129
 129
 1
 179
 6
Industrial & Warehouse 221
 896
 96
 225
 —
Other 319
 323
 21
 319
 17
Real Estate—Construction —
 —
 —
 —
 —
Commercial Business 1,987
 2,903
 854
 1,111
 47
Trade Finance —
 —
 —
 —
 —
Consumer and Other —
 —
 —
 —
 —
Subtotal $3,003
 $4,598
 $1,100
 $2,790
 $70
With No Related Allowance:          
Real Estate—Residential $—
 $—
 $—
 $235
 $—
Real Estate—Commercial          
Retail 3,412
 4,099
 —
 2,866
 141
Hotel & Motel 482
 1,887
 —
 3,086
 —
Gas Station & Car Wash 1
 28
 —
 619
 —
Mixed Use 152
 2,240
 —
 2,191
 —
Industrial & Warehouse 45
 45
 —
 59
 3
Other 9,131
 9,951
 —
 5,190
 340
Real Estate—Construction —
 —
 —
 —
 —
Commercial Business 16,746
 16,926
 —
 5,794
 182
Trade Finance 2,984
 3,001
 —
 1,274
 248
Consumer and Other 1,171
 1,291
 —
 645
 7
Subtotal $34,124
 $39,468
 $—
 $21,959
 $921
Total $37,127
 $44,066
 $1,100
 $24,749
 $991

*Unpaid contractual principal balance less charge-offs, interest applied to principal and purchase discounts.





F-34
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables present the amortized cost basis of loans receivable by segment, risk rating, and year of origination, renewal, or major modification at December 31, 2023 and 2022.
December 31, 2023
Term Loan by Origination YearRevolving LoansTotal
20232022202120202019Prior
(Dollars in thousands)
CRE loans
Pass$623,058 $2,429,146 $2,045,863 $1,239,654 $996,483 $1,297,295 $79,426 $8,710,925 
Special mention— 2,001 15,452 2,518 5,963 5,196 — 31,130 
Substandard— 1,549 7,300 2,711 2,083 42,186 — 55,829 
Subtotal$623,058 $2,432,696 $2,068,615 $1,244,883 $1,004,529 $1,344,677 $79,426 $8,797,884 
Year-to-date gross charge offs$103 $315 $— $233 $355 $1,941 $— $2,947 
C&I loans
Pass$1,107,219 $1,208,795 $683,821 $203,142 $162,815 $61,019 $479,266 $3,906,077 
Special mention9,743 23,413 31,388 8,597 14,614 — 60,107 147,862 
Substandard7,158 53,213 8,480 8,637 290 2,358 969 81,105 
Subtotal$1,124,120 $1,285,421 $723,689 $220,376 $177,719 $63,377 $540,342 $4,135,044 
Year-to-date gross charge offs$5,011 $12,323 $16,020 $128 $182 $539 $— $34,203 
Residential mortgage loans
Pass$93,982 $365,252 $263,977 $1,356 $29,063 $123,885 $— $877,515 
Special mention— — — — — — — — 
Substandard— — 314 1,836 957 3,065 — 6,172 
Subtotal$93,982 $365,252 $264,291 $3,192 $30,020 $126,950 $— $883,687 
Year-to-date gross charge offs$— $— $— $— $— $— $— $— 
Consumer and other loans
Pass$3,985 $944 $278 $2,068 $371 $8,221 $20,794 $36,661 
Special mention— — — — — — — — 
Substandard— — — — — 343 — 343 
Subtotal$3,985 $944 $278 $2,068 $371 $8,564 $20,794 $37,004 
Year-to-date gross charge offs$— $— $— $— $— $— $370 $370 
Total loans
Pass$1,828,244 $4,004,137 $2,993,939 $1,446,220 $1,188,732 $1,490,420 $579,486 $13,531,178 
Special mention9,743 25,414 46,840 11,115 20,577 5,196 60,107 178,992 
Substandard7,158 54,762 16,094 13,184 3,330 47,952 969 143,449 
Total$1,845,145 $4,084,313 $3,056,873 $1,470,519 $1,212,639 $1,543,568 $640,562 $13,853,619 
Total year-to-date gross charge offs$5,114 $12,638 $16,020 $361 $537 $2,480 $370 $37,520 
F-30
  December 31, 2016 Year Ended December 31, 2016
Total Impaired Loans Recorded Investment* 
Unpaid
Contractual Principal
Balance
 
Related
Allowance
 
Average
Recorded Investment*
 Interest Income Recognized during Impairment
  (Dollars in thousands)
With Related Allowance:          
Real Estate—Residential $—
 $—
 $—
 $—
 $—
Real Estate—Commercial          
Retail 2,095
 2,384
 90
 1,788
 —
Hotel & Motel 6,387
 6,387
 337
 3,650
 332
Gas Station & Car Wash 215
 228
 41
 884
 —
Mixed Use 206
 732
 27
 350
 7
Industrial & Warehouse 530
 530
 —
 547
 23
Other 22,580
 22,825
 1,507
 23,690
 1,033
Real Estate—Construction —
 —
 —
 —
 —
Commercial Business 26,543
 27,161
 4,493
 32,626
 988
Trade Finance 2,111
 2,156
 864
 7,134
 25
Consumer and Other 91
 91
 50
 289
 4
Subtotal $60,758
 $62,494
 $7,409
 $70,958
 $2,412
With No Related Allowance:          
Real Estate—Residential $3,562
 $3,562
 $—
 $712
 $119
Real Estate—Commercial          
Retail 12,753
 13,290
 —
 10,745
 451
Hotel & Motel 6,122
 11,735
 —
 8,275
 14
Gas Station & Car Wash 5,043
 7,449
 —
 4,817
 39
Mixed Use 7,303
 7,822
 —
 3,284
 282
Industrial & Warehouse 9,673
 9,748
 —
 10,252
 350
Other 20,181
 21,492
 —
 13,086
 479
Real Estate—Construction 1,300
 1,441
 —
 1,322
 —
Commercial Business 8,675
 9,472
 —
 10,559
 203
Trade Finance 3,918
 3,918
 —
 1,674
 208
Consumer and Other 1,073
 1,136
 —
 1,026
 29
Subtotal $79,603
 $91,065
 $—
 $65,752
 $2,174
Total $140,361
 $153,559
 $7,409
 $136,710
 $4,586

*Unpaid contractual principal balance less charge-offs, interest applied to principal and purchase discounts.















F-35
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2022
Term Loan by Origination YearRevolving LoansTotal
20222021202020192018Prior
(Dollars in thousands)
CRE loans
Pass$2,421,631 $2,194,073 $1,372,027 $1,076,405 $1,018,553 $1,064,267 $105,274 $9,252,230 
Special mention— 14,622 7,301 20,426 13,565 26,746 202 82,862 
Substandard— 8,240 1,736 7,881 10,250 51,381 — 79,488 
Subtotal$2,421,631 $2,216,935 $1,381,064 $1,104,712 $1,042,368 $1,142,394 $105,476 $9,414,580 
C&I loans
Pass$2,311,344 $1,090,034 $291,592 $298,133 $69,721 $95,531 $864,343 $5,020,698 
Special mention17,911 37,393 13,707 110 — 24 5,256 74,401 
Substandard— 2,833 5,889 1,000 1,020 3,691 — 14,433 
Subtotal$2,329,255 $1,130,260 $311,188 $299,243 $70,741 $99,246 $869,599 $5,109,532 
Residential mortgage loans
Pass$382,935 $283,163 $1,386 $30,603 $62,976 $75,242 $— $836,305 
Special mention— — — — — — — — 
Substandard— 311 — 967 384 8,113 — 9,775 
Subtotal$382,935 $283,474 $1,386 $31,570 $63,360 $83,355 $— $846,080 
Consumer and other loans
Pass$10,005 $723 $3,351 $223 $10 $1,420 $17,239 $32,971 
Special mention— — — — — — — — 
Substandard— — — — — 377 — 377 
Subtotal$10,005 $723 $3,351 $223 $10 $1,797 $17,239 $33,348 
Total loans
Pass$5,125,915 $3,567,993 $1,668,356 $1,405,364 $1,151,260 $1,236,460 $986,856 $15,142,204 
Special mention17,911 52,015 21,008 20,536 13,565 26,770 5,458 157,263 
Substandard— 11,384 7,625 9,848 11,654 63,562 — 104,073 
Total$5,143,826 $3,631,392 $1,696,989 $1,435,748 $1,176,479 $1,326,792 $992,314 $15,403,540 
For the years ended December 31, 2023 and 2022, there were no revolving loans converted to term loans.
The Company may reclassify loans held for investment to loans held for sale in the event that the Company plans to sell loans that were originated with the intent to hold to maturity. Loans transferred from held for investment to held for sale are carried at the lower of cost or fair value. The breakdown of loans by segment that were reclassified from held for investment to held for sale for the years ended December 31, 2023, 2022, and 2021 are presented in the following table:
Year Ended December 31,
202320222021
Transfer of loans held for investment to held for sale(Dollars in thousands)
CRE loans$114,186 $257,317 $365,426 
C&I loans307,209 54,218 100,154 
Residential mortgage loans— — 7,018 
Consumer loans— — — 
Total$421,395 $311,535 $472,598 
F-31
  December 31, 2016 Year Ended December 31, 2016
Impaired acquired loans Recorded Investment* 
Unpaid
Contractual Principal
Balance
 
Related
Allowance
 
Average
Recorded Investment*
 Interest Income Recognized during Impairment
  (Dollars in thousands)
With Related Allowance:          
Real Estate—Residential $—
 $—
 $—
 $—
 $—
Real Estate—Commercial          
Retail 1,826
 2,114
 85
 1,387
 —
Hotel & Motel —
 —
 —
 —
 —
Gas Station & Car Wash —
 —
 —
 203
 —
Mixed Use 136
 136
 2
 280
 7
Industrial & Warehouse —
 —
 —
 —
 —
Other 337
 341
 26
 327
 18
Real Estate—Construction —
 —
 —
 —
 —
Commercial Business 294
 339
 73
 448
 5
Trade Finance —
 —
 —
 —
 —
Consumer and Other —
 —
 —
 32
 —
Subtotal $2,593
 $2,930
 $186
 $2,677
 $30
With No Related Allowance:          
Real Estate—Residential $679
 $679
 $—
 $136
 $—
Real Estate—Commercial          
Retail 3,148
 3,214
 —
 2,496
 152
Hotel & Motel 4,767
 7,171
 —
 5,700
 14
Gas Station & Car Wash 1,568
 1,815
 —
 1,506
 39
Mixed Use 5,315
 5,551
 —
 1,238
 245
Industrial & Warehouse 66
 66
 —
 873
 3
Other 6,023
 6,752
 —
 4,021
 177
Real Estate—Construction —
 —
 —
 —
 —
Commercial Business 141
 386
 —
 580
 2
Trade Finance —
 —
 —
 —
 —
Consumer and Other 431
 484
 —
 453
 9
Subtotal $22,138
 $26,118
 $—
 $17,003
 $641
Total $24,731
 $29,048
 $186
 $19,680
 $671

*Unpaid contractual principal balance less charge-offs, interest applied to principal and purchase discounts.










F-36
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Loan Modifications to Borrowers Experiencing Financial Difficulty
  Year Ended December 31, 2015
Total Impaired Loans 
Average
Recorded Investment*
 Interest Income Recognized during Impairment
  (Dollars in thousands)
With Related Allowance:    
Real Estate—Residential $—
 $—
Real Estate—Commercial    
Retail 3,388
 —
Hotel & Motel 10,512
 230
Gas Station & Car Wash 1,542
 59
Mixed Use 498
 9
Industrial & Warehouse 3,686
 25
Other 12,585
 1,110
Real Estate—Construction —
 —
Commercial Business 31,790
 998
Trade Finance 6,209
 527
Consumer and Other 153
 7
Subtotal $70,363
 $2,965
With No Related Allowance:    
Real Estate—Residential $—
 $—
Real Estate—Commercial    
Retail 10,779
 464
Hotel & Motel 6,455
 93
Gas Station & Car Wash 3,685
 107
Mixed Use 2,375
 51
Industrial & Warehouse 10,186
 254
Other 9,355
 362
Real Estate—Construction 1,153
 —
Commercial Business 8,722
 345
Trade Finance 986
 —
Consumer and Other 1,177
 26
Subtotal $54,873
 $1,702
Total $125,236
 $4,667
*Unpaid contractual principal balance less charge-offs, interest applied to principal and purchase discounts.

F-37
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

  Year Ended December 31, 2015
Impaired acquired loans 
Average
Recorded Investment*
 Interest Income Recognized during Impairment
  (Dollars in thousands)
With Related Allowance:    
Real Estate—Residential $—
 $—
Real Estate—Commercial    
Retail 1,835
 —
Hotel & Motel —
 —
Gas Station & Car Wash 1,246
 59
Mixed Use 380
 9
Industrial & Warehouse 72
 —
Other 797
 16
Real Estate—Construction —
 —
Commercial Business 671
 15
Trade Finance —
 —
Consumer and Other —
 —
Subtotal $5,001
 $99
With No Related Allowance:    
Real Estate—Residential $—
 $—
Real Estate—Commercial    
Retail 2,301
 105
Hotel & Motel 5,889
 73
Gas Station & Car Wash 651
 64
Mixed Use 210
 13
Industrial & Warehouse 1,275
 9
Other 4,162
 53
Real Estate—Construction —
 —
Commercial Business 892
 55
Trade Finance —
 —
Consumer and Other 629
 7
Subtotal $16,009
 $379
Total $21,010
 $478
*Unpaid contractual principal balance less charge-offs, interest applied to principal and purchase discounts.












F-38
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables present the aging of past due loans as of December 31, 2017 and December 31, 2016 by class of loans:
 December 31, 2017
 Past Due and Accruing 
Nonaccrual Loans (2)
 Total Delinquent and Nonaccrual Loans
 
30-59
Days
 
60-89 
Days
 90 or More Days Total
 (Dollars in thousands)
Legacy Loans 
Real Estate—Residential$—
 $—
 $—
 $—
 $—
 $—
Real Estate—Commercial           
Retail2,384
 —
 —
 2,384
 3,179
 5,563
Hotel & Motel1,884
 1,027
 —
 2,911
 3,931
 6,842
Gas Station & Car Wash956
 —
 —
 956
 590
 1,546
Mixed Use129
 —
 —
 129
 1,132
 1,261
Industrial & Warehouse1,121
 99
 —
 1,220
 3,403
 4,623
Other1,408
 —
 —
 1,408
 5,689
 7,097
Real Estate—Construction—
 —
 —
 —
 1,300
 1,300
Commercial Business698
 505
 —
 1,203
 8,540
 9,743
Trade Finance—
 —
 —
 —
 —
 —
Consumer and Other7,512
 93
 407
 8,012
 471
 8,483
     Subtotal$16,092
 $1,724
 $407
 $18,223
 $28,235
 $46,458
Acquired Loans (1)
           
Real Estate—Residential$—
 $—
 $—
 $—
 $—
 $—
Real Estate—Commercial           
Retail81
 216
 —
 297
 638
 935
Hotel & Motel—
 1,219
 —
 1,219
 568
 1,787
Gas Station & Car Wash1,161
 41
 —
 1,202
 1
 1,203
Mixed Use151
 —
 —
 151
 152
 303
Industrial & Warehouse804
 264
 —
 1,068
 221
 1,289
Other—
 —
 —
 —
 1,389
 1,389
Real Estate—Construction—
 —
 —
 —
 —
 —
Commercial Business1,088
 155
 —
 1,243
 14,560
 15,803
Trade Finance—
 —
 —
 —
 —
 —
Consumer and Other957
 —
 —
 957
 1,011
 1,968
     Subtotal$4,242
 $1,895
 $—
 $6,137
 $18,540
 $24,677
TOTAL$20,334
 $3,619
 $407
 $24,360
 $46,775
 $71,135
(1)
Acquired loans exclude PCI loans.
(2)
Nonaccrual loans exclude the guaranteed portion of delinquent SBA loans that are in liquidation totaling $22.1 million.


F-39
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 December 31, 2016
 Past Due and Accruing 
Nonaccrual Loans (2)
 Total Delinquent and Nonaccrual Loans
 
30-59
Days
 60-89 
Days		 90 or More Days Total
 (Dollars in thousands)
Legacy Loans 
Real Estate—Residential$—
 $—
 $—
 $—
 $—
 $—
Real Estate—Commercial           
Retail480
 —
 —
 480
 3,672
 4,152
Hotel & Motel1,836
 3,137
 —
 4,973
 1,392
 6,365
Gas Station & Car Wash362
 —
 —
 362
 3,690
 4,052
Mixed Use—
 —
 —
 —
 1,305
 1,305
Industrial & Warehouse—
 697
 —
 697
 1,922
 2,619
Other2,871
 —
 —
 2,871
 4,007
 6,878
Real Estate—Construction—
 1,513
 —
 1,513
 1,300
 2,813
Commercial Business558
 815
 —
 1,373
 9,371
 10,744
Trade Finance—
 500
 —
 500
 2,056
 2,556
Consumer and Other146
 58
 305
 509
 229
 738
     Subtotal$6,253
 $6,720
 $305
 $13,278
 $28,944
 $42,222
Acquired Loans (1)
           
Real Estate—Residential$—
 $—
 $—
 $—
 $679
 $679
Real Estate—Commercial           
Retail1,611
 —
 —
 1,611
 1,871
 3,482
Hotel & Motel95
 —
 —
 95
 4,501
 4,596
Gas Station & Car Wash68
 340
 —
 408
 993
 1,401
Mixed Use—
 —
 —
 —
 48
 48
Industrial & Warehouse257
 —
 —
 257
 —
 257
Other350
 —
 —
 350
 2,144
 2,494
Real Estate—Construction—
 —
 —
 —
 —
 —
Commercial Business1,303
 684
 —
 1,987
 345
 2,332
Trade Finance—
 —
 —
 —
 —
 —
Consumer and Other331
 25
 —
 356
 549
 905
     Subtotal$4,015
 $1,049
 $—
 $5,064
 $11,130
 $16,194
TOTAL$10,268
 $7,769
 $305
 $18,342
 $40,074
 $58,416
(1)
Acquired loans exclude PCI loans.
(2)
Nonaccrual loans exclude the guaranteed portion of delinquent SBA loans that are in liquidation totaling $15.9 million.
Loans accounted for under ASC 310-30 are generally considered accruing and performing loans and the accretable discount is accreted to interest income over the estimate life of the loan when cash flows are reasonably estimable. Accordingly, PCI loans that are contractually past due are still considered to be accruing and performing loans. The loans may be classified as nonaccrual if the timing and amount of future cash flows is not reasonably estimable.


F-40
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables present the risk rating for Legacy Loans and Acquired Loans as of December 31, 2017 and December 31, 2016 by class of loans:
 December 31, 2017
 Pass 
Special
Mention
 Substandard Doubtful Total
 (Dollars in thousands)
Legacy Loans:   
Real Estate—Residential$33,557
 $1,147
 $1,439
 $—
 $36,143
Real Estate—Commercial        
Retail1,640,809
 32,723
 17,856
 —
 1,691,388
Hotel & Motel1,224,597
 19,358
 8,877
 —
 1,252,832
Gas Station & Car Wash737,485
 9,013
 590
 —
 747,088
Mixed Use421,755
 4,581
 1,477
 —
 427,813
Industrial & Warehouse577,344
 16,716
 24,317
 —
 618,377
Other1,133,188
 30,030
 53,995
 —
 1,217,213
Real Estate—Construction219,583
 —
 3,052
 —
 222,635
Commercial Business1,389,043
 35,640
 65,912
 —
 1,490,595
Trade Finance152,583
 2,200
 1,372
 —
 156,155
Consumer and Other477,370
 5
 908
 —
 478,283
Subtotal$8,007,314
 $151,413
 $179,795
 $—
 $8,338,522
Acquired Loans:         
Real Estate—Residential$13,369
 $262
 $—
 $—
 $13,631
Real Estate—Commercial         
Retail630,555
 6,921
 20,797
 —
 658,273
Hotel & Motel275,191
 4,247
 24,987
 —
 304,425
Gas Station & Car Wash194,063
 2,872
 8,992
 —
 205,927
Mixed Use94,864
 5,725
 14,738
 —
 115,327
Industrial & Warehouse250,049
 14,973
 16,358
 265
 281,645
Other568,545
 19,848
 33,335
 —
 621,728
Real Estate—Construction93,777
 —
 —
 —
 93,777
Commercial Business236,705
 8,593
 44,964
 12
 290,274
Trade Finance7,455
 —
 3,054
 —
 10,509
Consumer and Other162,495
 37
 6,202
 85
 168,819
Subtotal$2,527,068
 $63,478
 $173,427
 $362
 $2,764,335
Total$10,534,382
 $214,891
 $353,222
 $362
 $11,102,857


F-41
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 December 31, 2016
 Pass 
Special
Mention
 Substandard Doubtful/Loss Total
 (Dollars in thousands)
Legacy Loans:   
Real Estate—Residential$34,283
 $223
 $2,883
 $—
 $37,389
Real Estate—Commercial         
Retail1,303,452
 18,929
 15,430
 —
 1,337,811
Hotel & Motel1,187,709
 12,763
 9,026
 —
 1,209,498
Gas Station & Car Wash643,282
 7,259
 3,690
 —
 654,231
Mixed Use375,312
 —
 1,467
 —
 376,779
Industrial & Warehouse478,528
 29,830
 13,745
 —
 522,103
Other969,024
 22,220
 41,017
 —
 1,032,261
Real Estate—Construction159,230
 14,745
 1,300
 —
 175,275
Commercial Business1,032,232
 15,919
 65,885
 95
 1,114,131
Trade Finance68,051
 5,673
 7,670
 —
 81,394
Consumer and Other179,864
 1
 829
 —
 180,694
Subtotal$6,430,967
 $127,562
 $162,942
 $95
 $6,721,566
Acquired Loans:   
Real Estate—Residential$18,007
 $1,809
 $679
 $—
 $20,495
Real Estate—Commercial         
Retail772,465
 9,860
 21,110
 —
 803,435
Hotel & Motel328,396
 5,419
 18,233
 —
 352,048
Gas Station & Car Wash249,379
 8,437
 11,338
 —
 269,154
Mixed Use118,643
 3,105
 12,505
 8
 134,261
Industrial & Warehouse321,040
 31,819
 9,048
 315
 362,222
Other736,385
 23,286
 29,099
 —
 788,770
Real Estate—Construction78,838
 —
 —
 —
 78,838
Commercial Business649,186
 31,340
 37,265
 99
 717,890
Trade Finance70,535
 61
 2,938
 —
 73,534
Consumer and Other214,437
 958
 5,949
 1,432
 222,776
Subtotal$3,557,311
 $116,094
 $148,164
 $1,854
 $3,823,423
Total$9,988,278
 $243,656
 $311,106
 $1,949
 $10,544,989


F-42
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents loans sold from loans held for investment or transferred from held for investment to held for sale during the year endedDecember 31, 2017 and 2016 by portfolio segment:
 Year ended December 31,
 2017 2016
 (Dollars in thousands)
Sales or reclassification to held for sale 
Real Estate - Commercial$429
 $5,920
Real Estate - Construction—
 —
Commercial Business—
 3,457
Consumer—
 2,508
     Total$429
 $11,885
The following table presents loans by portfolio segment and impairment method at December 31, 2017 and December 31, 2016:
 December 31, 2017
 
Real estate -
Residential
 
Real estate -
Commercial
 
Real estate -
Construction
 
Commercial
business
 
Trade
finance
 
Consumer
and other
 Total
 (Dollars in thousands)
Impaired loans
(recorded investment)
$—
 $53,980
 $1,300
 $50,055
 $6,935
 $2,079
 $114,349
Specific allowance$—
 $1,624
 $—
 $3,661
 $3
 $35
 $5,323
Specific allowance to impaired loansN/A
 3.01% N/A
 7.31% 0.04% 1.68% 4.66%
Other loans$49,774
 $8,088,056
 $315,112
 $1,730,814
 $159,729
 $645,023
 $10,988,508
General allowance$88
 $56,040
 $930
 $17,094
 $1,713
 $3,353
 $79,218
General allowance to other loans0.18% 0.69% 0.30% 0.99% 1.07% 0.52% 0.72%
Total loans outstanding$49,774

$8,142,036

$316,412
 $1,780,869
 $166,664
 $647,102
 $11,102,857
Total allowance for loan losses$88
 $57,664
 $930
 $20,755
 $1,716
 $3,388
 $84,541
Total allowance to total loans0.18% 0.71% 0.29% 1.17% 1.03% 0.52% 0.76%
 December 31, 2016
 
Real estate -
Residential
 
Real estate -
Commercial
 
Real estate -
Construction
 
Commercial
business
 
Trade
finance
 
Consumer
and other
 Total
 (Dollars in thousands)
Impaired loans
(recorded investment)
$3,562
 $93,088
 $1,300
 $35,218
 $6,029
 $1,164
 $140,361
Specific allowance$—
 $2,002
 $—
 $4,493
 $864
 $50
 $7,409
Specific allowance to impaired loansN/A
 2.15% N/A
 12.76% 14.33% 4.30% 5.28%
Other loans$54,322
 $7,749,485
 $252,813
 $1,796,803
 $148,899
 $402,306
 $10,404,628
General allowance$209
 $47,915
 $1,621
 $19,054
 $1,033
 $2,102
 $71,934
General allowance to other loans0.38% 0.62% 0.64% 1.06% 0.69% 0.52% 0.69%
Total loans outstanding$57,884
 $7,842,573
 $254,113
 $1,832,021
 $154,928
 $403,470
 $10,544,989
Total allowance for loan losses$209
 $49,917
 $1,621
 $23,547
 $1,897
 $2,152
 $79,343
Total allowance to total loans0.36% 0.64% 0.64% 1.29% 1.22% 0.53% 0.75%

F-43
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Under certain circumstances,In January 2023, the Company provides borrowers relief throughadopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): TDR and Vintage Disclosures (“ASU 2022-02”), which eliminated the accounting guidance for TDR while enhancing disclosure requirements for certain loan modifications. These modifications are either temporary in nature (“temporary modifications”) or are more substantive. At December 31, 2017, total modified loans were $78.5 million, compared to $70.9 million at December 31, 2016. The temporary modifications generally consist of interest only payments for a three to six month period, whereby principal payments are deferred. At the end of the modification period, the remaining principal balance is re-amortized based on the original maturity date. Loans subject to temporary modifications are generally downgraded to Substandard or Special Mention. At the end of the modification period, the loan either 1) returns to the original contractual terms; 2) is further modifiedrefinancing and accounted for as a troubled debt restructuring in accordance with ASC 310-10-35; or 3) is disposed of through foreclosure or liquidation.
Troubled Debt Restructurings (“TDRs”) of loans are definedrestructurings by ASC 310-40, Troubled Debt Restructurings by Creditors, and ASC 470-60, Troubled Debt Restructurings by Debtors, and evaluated for impairment in accordance with ASC 310-10-35. The concessions may be granted in various forms, including reduction in the stated interest rate, reduction in the amount of principal amortization, forgiveness of a portion of a loan balance or accrued interest, or extension of the maturity date. In order to determine whethercreditors when a borrower is experiencing financial difficulty, an evaluationdifficulty. The Company applied this guidance on a modified retrospective transition method, which resulted in a positive cumulative effect adjustment to retained earnings of $287 thousand, net of tax. Subsequent to the adoption of ASU 2022-02, the new guidance is performed ofapplied uniformly to the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under our internal underwriting policy.Company’s entire loan portfolio when estimating expected credit losses.
A summary of TDRs on accrualloans modified to borrowers experiencing financial difficulty for the periods presented, disaggregated by loan class and nonaccrual by type of concession asmodification, is shown in the tables below:
 Year Ended December 31, 2023
 CRE LoansC&I LoansResidential Mortgage LoansConsumer and Other LoansTotal
 (Dollars in thousands)
Principal forgiveness$— $— $— $— $— 
Interest rate reduction— — — — — 
Payment delay— — — — — 
Term extension1,111 27,032 — — 28,143 
Total Loan Modifications$1,111 $27,032 $— $— $28,143 
% of Loan Class0.01 %0.65 %— %— %0.20 %
The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. All loans that have been modified to borrowers experiencing financial difficulty in the last 12 months to borrowers experiencing financial difficulty were current at December 31, 2017,2023.
There were no loan modifications that had payment defaults during the twelve months ended months ended December 31, 2016,2023, and were modified in the 12 months prior to default, to borrowers experiencing financial difficulty.
Troubled Debt Restructurings
At December 31, 2015 is presented below:
 December 31, 2017
 TDRs on accrual TDRs on nonaccrual Total
 
Real estate -
Commercial
 
Commercial
Business
 Other Sub-Total 
Real estate -
Commercial
 
Commercial
Business
 Other Sub-Total 
 (Dollars in thousands)
Payment concession$22,550
 $376
 $—
 $22,926
 $3,071
 $170
 $—
 $3,241
 $26,167
Maturity / Amortization concession4,768
 25,584
 7,442
 37,794
 1,536
 5,264
 98
 6,898
 44,692
Rate concession5,444
 996
 90
 6,530
 1,083
 18
 —
 1,101
 7,631
Principal forgiveness—
 —
 —
 —
 —
 —
 —
 —
 —
Total$32,762
 $26,956
 $7,532
 $67,250
 $5,690
 $5,452
 $98
 $11,240
 $78,490
 December 31, 2016
 TDRs on accrual
TDRs on nonaccrual
Total
 Real estate -
Commercial
Commercial
Business
Other
Sub-Total
Real estate -
Commercial
Commercial
Business
Other
Sub-Total
 (Dollars in thousands)
Payment concession$16,358
 $29
 $—
 $16,387
 $4,417
 $1,717
 $—
 $6,134
 $22,521
Maturity / Amortization concession1,840
 17,471
 4,600
 23,911
 1,313
 6,130
 2,287
 9,730
 33,641
Rate concession6,856
 1,665
 55
 8,576
 5,590
 387
 155
 6,132
 14,708
Principal forgiveness—
 —
 —
 —
 —
 —
 —
 —
 —
Total$25,054
 $19,165
 $4,655
 $48,874
 $11,320
 $8,234
 $2,442
 $21,996
 $70,870
 December 31, 2015
 TDRs on accrual TDRs on nonaccrual Total
 Real estate -
Commercial		 Commercial
Business		 Other Sub-Total Real estate -
Commercial		 Commercial
Business		 Other Sub-Total 
 (Dollars in thousands)
Payment concession$11,604
 $375
 $—
 $11,979
 $3,891
 $2,410
 $—
 $6,301
 $18,280
Maturity / Amortization concession4,009
 18,192
 5,311
 27,512
 1,583
 6,818
 2,297
 10,698
 38,210
Rate concession7,215
 1,278
 —
 8,493
 6,445
 641
 166
 7,252
 15,745
Principal forgiveness—
 —
 —
 —
 —
 —
 —
 —
 —
Total$22,828
 $19,845
 $5,311
 $47,984
 $11,919
 $9,869
 $2,463
 $24,251
 $72,235

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Table2022, TDR loans totaled $41.1 million, consisting of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

TDRs$16.9 million in TDR loans on accrual status are comprisedand $24.2 million in TDR loans on nonaccrual status. The Company recorded an allowance for credit losses totaling $2.8 million for TDR loans at December 31, 2022. On January 1, 2023, the Company adopted ASU 2022-02, which eliminated the accounting guidance for TDR loans. The Company adopted ASU 2022-02 by applying the amended requirements prospectively, except the recognition and measurement of loans that were accruing at the time of restructuring andexisting TDRs, for which the Bank anticipates full repayment of both principal and interest underCompany elected the restructured terms. TDRs that are on nonaccrual can be returnedoption to accrual status afterapply a period of sustained performance, generally determined to be six months of timely payments as modified. Sustained performance includes the periods prior to the modification if the prior performance met or exceeded the modified terms. TDRs on accrual status at December 31, 2017 were comprised of 24 commercial real estate loans totaling $32.8 million, 27 commercial business loans totaling $27.0 million and 56 consumer and other loans totaling $7.5 million. TDRs on accrual status at December 31, 2016 were comprised of 20 commercial real estate loans totaling $25.1 million, 23 commercial business loans totaling $19.2 million, and 19 consumer and other loans totaling $4.7 million. TDRs on accrual status at December 31, 2015 were comprised of 24 commercial real estate loans totaling $22.8 million, 28 commercial business loans totaling $19.8 million, and 4 consumer loans totaling $5.3 million. Management expects that the TDRs on accrual status as of December 31, 2017, which were all performing in accordance with their restructured terms, will continue to comply with the restructured terms because of the reduced principal or interest payments on these loans. TDRs that were restructured at market interest rates and had sustained performance as agreed under the modified loan terms may be reclassified as non-TDRs after each year end but are still monitored for potential impairment.
The Company has allocated $4.8 million, $5.3 million, and $5.7 million of specific reserves to TDRs as of December 31, 2017, 2016, and 2015, respectively. As of December 31, 2017, 2016, and 2015retrospective transition method. Therefore, the Company did not have any outstanding commitments to extend additional funds to these borrowers.

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HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presentsTDR loans by class modified as TDRs that occurred during the years endedat December 31, 2017, 2016, and 2015:2023.
 For The Years Ended December 31,
 2017 2016 2015
 Number of Loans  Pre-Modification Post-Modification  Number of Loans  Pre-Modification Post-Modification  Number of Loans  Pre-Modification Post-Modification 
 (Dollars in thousands)
Legacy Loans:                 
Real Estate - Residential— $—
 $—
 — $—
 $—
 — $—
 $—
Real Estate - Commercial                 
Retail2 1,082
 1,082
 — —
 —
 2 750
 733
Hotel & Motel1 1,044
 1,044
 — —
 —
 — —
 —
Gas Station & Car Wash— —
 —
 — —
 —
 2 383
 351
Mixed Use— —
 —
 — —
 —
 2 437
 407
Industrial & Warehouse1 465
 465
 — —
 —
 — —
 —
Other— —
 —
 3 1,675
 6,824
 2 1,762
 1,700
Real Estate - Construction— —
 —
 — —
 —
 — —
 —
Commercial business14 8,507
 8,507
 12 12,311
 7,413
 18 9,171
 13,234
Trade Finance— —
 —
 — —
 —
 2 7,623
 2,208
Consumer and Other— —
 —
 1 —
 91
 1 248
 237
Subtotal18 $11,098
 $11,098
 16 $13,986
 $14,328
 29 $20,374
 $18,870
Acquired Loans:                 
Real Estate - Residential— $—
 $—
 — $—
 $—
 — $—
 $—
Real Estate - Commercial                 
Retail3 1,642
 1,642
 1 1,377
 1,335
 — —
 —
Hotel & Motel1 482
 482
 — —
 —
 — —
 —
Gas Station & Car Wash— —
 —
 — —
 —
 — —
 —
Mixed Use— —
 —
 — —
 —
 3 425
 416
Industrial & Warehouse— —
 —
 — —
 —
 — —
 —
Other2 6,946
 6,946
 — —
 —
 — —
 —
Real Estate - Construction— —
 —
 — —
 —
 — —
 —
Commercial business8 4,224
 4,224
 1 13
 11
 1 56
 13
Trade Finance1 2,983
 2,983
 — —
 —
 — —
 —
Consumer and Other— —
 —
 1 30
 25
 1 115
 104
Subtotal15 $16,277
 $16,277
 3 $1,420
 $1,371
 5 $596
 $533
Total33 $27,375
 $27,375
 19 $15,406
 $15,699
 34 $20,970
 $19,403
The specific reserves for the TDRs described above as of December 31, 2017, 2016, and 2015 were $1.4 million, $1.2 million, and $2.9 million, respectively, and the charge offs for the years ended December 31, 2017, 2016, 2015 and were $0, $4 thousand, and $42 thousand respectively.

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HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents loans by class for TDRs that have been modified within the previous twelve months and have subsequently had a payment default during the years ended December 31, 2017, 2016, and 2015:
 For The Years Ended December 31,
 2017 2016 2015
 
Number of
Loans
 Balance 
Number of
Loans
 Balance Number of
Loans		 Balance
 (Dollars in thousands)
Legacy Loans:           
Real Estate - Commercial           
Retail— $—
 — $—
 — $—
Hotel & Motel— —
 — —
 — —
Gas Station & Car Wash— —
 — —
 1 121
Mixed Use— —
 — —
 1 103
Industrial & Warehouse— —
 — —
 — —
Other— —
 — —
 1 307
Commercial Business2 178
 4 580
 4 2,091
Consumer and Other— —
 — —
 — —
Subtotal2 $178
 4 $580
 7 $2,622
Acquired Loans:           
Real Estate - Commercial           
Retail— $—
 — $—
 — $—
Hotel & Motel1 482
 — —
 — —
Mixed Use— —
 — —
 1 63
Gas Station & Car Wash— —
 — —
 — —
Industrial & Warehouse— —
 — —
 — —
Other1 2,977
 — —
 — —
Commercial Business1 40
 1 11
 — —
Consumer and Other— —
 1 25
 1 104
Subtotal3 $3,499
 2 $36
 2 $167
Total5 $3,677
 6 $616
 9 $2,789
A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. The specific reserves for the TDRs described above as of December 31, 2017, 2016, and 2015 were $60 thousand, $371 thousand, and $303 thousand respectively, and the charge offs for the years ended December 31, 2017, 2016, and 2015 were $0, $4 thousand, and $0 respectively.
The two Legacy Loans that subsequently defaulted in 2017 were modified through payment concession or maturity concession. The payment concession was comprised of one commercial business loan totaling $40 thousand. The maturity concession was comprised of one commercial business loan totaling $138 thousand.
The three Acquired Loans that subsequently defaulted in 2017 were modified through payment concessions or maturity concession. The maturity concession was comprised of one commercial business loan totaling $40 thousand. There were two real estate loans totaling $3.5 million modified through payment concessions.
The four Legacy Loans that subsequently defaulted in 2016 were modified through payment concessions or maturity concession. The payment concessions were comprised of three commercial business loans totaling $490 thousand. The maturity concession was comprised of one commercial business loan totaling $90 thousand.
The two Acquired Loans that subsequently defaulted in 2016 were modified through payment concession or maturity concession. The payment concession was comprised of one commercial business loan totaling $11 thousand. There was one consumer and other loan totaling $25 thousand modified through a maturity concession.

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HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


The seven Legacy Loans that subsequently defaulted in 2015 were modified through payment concessions or maturity concessions. The payment concessions were comprised of one real estate loan totaling $121 thousand and four commercial business loans totaling $2.1 million. The maturity concessions were comprised of two real estate loans totaling $410 thousand.
The two Acquired Loans that subsequently defaulted in 2015 were modified through payment concession or maturity concession. The payment concession was comprised of one real estate loan totaling $63 thousand. There was one consumer and other loan totaling $104 thousand modified through a maturity concession.
Related Party Loans
In the ordinary course of business, the Company enters into loan transactions with certain of its directors and executives or associates of such directors or executives (“Related Parties”). All loans to Related Parties were made at substantially the same terms and conditions at the time of origination as other originated loans to borrowers that were not affiliated with the Company. All loans to Related Parties were current as ofat December 31, 20172023 and 2016,2022, and the outstanding principal balance as ofat December 31, 20172023 and 20162022, was $41.0$86.2 million and $42.8$92.8 million, respectively. Loans to related partiesRelated Parties at December 31, 20172023, consisted of $40.0$86.2 million in commercial real estate loans and $1.0 million in commercialCRE loans. Loans to related partiesRelated Parties at December 31, 20162022, consisted of $40.7$92.8 million in commercial real estateCRE loans and $29 thousand in C&I loans. The decrease in Related Party loans from December 31, 2022, to December 31, 2023, was due to payoffs of $4.6 million and payments of $2.1 million in commercial loans.million.



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HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5.    GOODWILL AND OTHER INTANGIBLE ASSETS
5.GOODWILL AND OTHER INTANGIBLE ASSETS
The carrying amount of the Company’s goodwill as ofat December 31, 20172023 and 20162022, was $464.5 millionmillion. There was no impairment of goodwill recorded during the year ended December 31, 2023.
Goodwill and $463.0 million, respectively.other intangible assets generated from business combinations and deemed to have indefinite lives, are not subject to amortization and, instead, are tested for impairment annually at the reporting unit level unless a triggering event occurs, thereby requiring an updated assessment. Goodwill represents the excess of the purchase price over the sum of the estimated fair values of the tangible and identifiable intangible assets acquired less the estimated fair value of the liabilities assumed. Goodwill has an indefinite useful life and is evaluated for impairment annually or more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent thatImpairment exists when the carrying amountvalue of the goodwill exceeds the asset’s fair value. Management assessed the qualitative factors related to intangible assets and goodwill and for 2017 to determine whether it was more-likely-than-not that the fair value was less than its carrying amount. Based on the analysis of these factors, management determined that it was more-likely-than-not that intangible assets were not impaired and that the fair value of the reporting unit.
In March 2023, the impact to banks caused by the closure of well-known regional banks which caused disruption to the banking industry resulting in a decline to overall bank stock prices. As a result, the Company performed a step 1 interim goodwill exceededimpairment assessment as of June 30, 2023 and September 30, 2023 as the carryingCompany determined the decline in stock price and industry disruption to be triggering events in its qualitative assessment of goodwill impairment. Management estimated the fair value of the Company using the income approach based on the discounted free cash flows of the Company’s projected income and taking into consideration future economic forecasts available and the market approach using the guideline public company method. Based on these quantitative assessments, management concluded that the two-step goodwill impairment test was not needed. Goodwill is not amortized for book purposesimpaired at June 30, 2023 and is not tax deductible.
During the fourth quarter of 2016, the Company made a net adjustment of $1.4 million to the deferred tax assets and taxes receivable acquired from Wilshire which reduced the previous goodwill recorded from the transaction by $1.4 million. Subsequently in first quarter of 2017, the Company made a net adjustment of $978 thousand to OREO and deferred tax assets acquired from Wilshire which increased goodwill recorded from the Wilshire transaction by this amount. During the second quarter of 2017, the Company made a final adjustment of $475 thousand to deferred tax assets which increased goodwill by the same amount. These adjustments were made to reflect new information obtained about facts and circumstances that existed as of the acquisition date in accordance with ASC 805-10-25-13.September 30, 2023. At December 31, 2017,2023, the Company performed a qualitative goodwill related toimpairment assessment and management has concluded that goodwill was more than likely not impaired. As the acquisition of Wilshire totaled $359.0 million.Company operates as single business unit, goodwill impairment was assessed based on the Company as a whole.
The following table provides information regarding the amortization of core deposit intangibles at December 31, 20172023 and 2016:2022:
  December 31, 2023December 31, 2022
Core Deposit Intangibles Related To:Amortization PeriodGross
Amount		Accumulated
Amortization		Carrying AmountAccumulated
Amortization		Carrying Amount
 (Dollars in thousands)
Foster Bankshares acquisition10 years$2,763 $(2,763)$— $(2,668)$95 
Wilshire Bancorp acquisition10 years18,138 (14,203)3,935 (12,507)5,631 
Total$20,901 $(16,966)$3,935 $(15,175)$5,726 
   December 31,
   2017 2016
 
Amortization
Period
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
   (Dollars in thousands)
Core deposit intangibles related to:         
Center Financial7 years $4,100
 $(3,966) $4,100
 $(3,685)
Pacific International Bank7 years 604
 (534) 604
 (467)
Foster Bankshares10 years 2,763
 (1,636) 2,763
 (1,344)
Wilshire Bancorp10 years 18,138
 (2,946) 18,138
 (883)
Total  $25,605
 $(9,082) $25,605
 $(6,379)
In July 2016, the Company recorded $18.1 million in core deposits intangibles from the acquisition of Wilshire. Total amortizationAmortization expense onrelated to core deposit intangiblesintangible assets was $2.7$1.8 million, $1.9 million and $1.7$2.0 million for the years ended December 31, 20172023, 2022 and 2016,2021, respectively. The increase in core deposit intangibles expenses for 2017 was due to a full year amortization of Wilshire related core deposit intangibles compared to only five months of amortization in 2016. The estimated future amortization expense over the next five years for core deposit intangibles is as follows: $2.5 million in 2018, $2.2 million in 2019, $2.1 million in 2020, $2.0 million in 2021, and $1.9$1.6 million in 2022.2024, $1.5 million in 2025, and $829 thousand in 2026.
In light of the Tax Cuts and Jobs Act that was enacted on December 22, 2017, the Company performed an analysis on its remaining core deposit intangibles to assess the potential impact from the reduction in corporate tax rates on core deposit intangibles. As core deposit intangibles represents the after tax cash flow savings on acquired core deposits, a change in tax rates could potentially result in an impairment to remaining core deposits intangibles. The Company determined that it was more-likely-than-not that the remaining core deposit intangibles were not impaired as a reduction in corporate tax rates would potentially increase after tax cash flows.




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HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6.    PREMISES AND EQUIPMENT
6.PREMISES AND EQUIPMENT
The following table provides information regarding the premises and equipment at December 31, 20172023 and 2016:2022:
December 31,
20232022
(Dollars in thousands)
Land$11,244 $11,244 
Building and improvements24,289 24,191 
Furniture, fixtures, and equipment34,085 32,347 
Leasehold improvements28,739 29,061 
Vehicles123 123 
Software/License23,283 17,532 
Total premises and equipment, gross121,763 114,498 
Less: Accumulated depreciation and amortization(71,152)(67,639)
Total premises and equipment, net$50,611 $46,859 
 December 31,
 2017 2016
 (Dollars in thousands)
Land$11,244
 $13,723
Building and improvements23,127
 21,315
Furniture, fixtures, and equipment25,953
 23,597
Leasehold improvements27,018
 22,494
Software/License8,389
 6,802
 95,731
 87,931
Less: Accumulated depreciation and amortization(39,017) (32,615)
Total premises and equipment, net$56,714
 $55,316


Depreciation and amortization expense totaled $9.3$8.4 million, $8.1$7.9 million, and $7.0$8.2 million for 2017, 2016,the years ended December 31, 2023, 2022, and 2015,2021, respectively. In 2017, the Company sold buildings and land related to three former branch locations for total cash proceeds of $4.9 million for a net gain of $808 thousand.

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HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7.    LEASES
7.DEPOSITS
The Company’s operating leases are real estate leases of bank branch locations, loan production offices, and office spaces with remaining lease terms ranging from one to nine years at December 31, 2023. Certain lease arrangements contain extension options, which are typically around five years. As these extension options are not generally considered reasonably certain of exercise, they are not included in the lease term. 
The table below summarizes supplemental balance sheet information related to operating leases:
December 31,
20232022
(Dollars in thousands)
Operating lease ROU assets$46,611 $55,034 
Current portion of long-term lease liabilities14,287 13,769 
Long-term lease liabilities38,383 45,319 
The Company uses its incremental borrowing rate to present value lease payments in order to recognize a ROU asset and the related lease liability. The Company calculates its incremental borrowing rate by adding a spread to the FHLB borrowing interest rate at a given period. During the year ended December 31, 2023, the Company extended ten leases and there were two new lease contracts. Lease extension terms ranged from two to six years and the Company reassessed the ROU assets and lease liabilities related to these leases.
During the year ended December 31, 2023, the Company wrote off $2.2 million in operating lease ROU assets resulting from the branch consolidation of seven locations. There was no operating ROU assets written off during the same period of 2022.
The table below summarizes the Company’s net operating lease cost:
Year Ended December 31,
202320222021
(Dollars in thousands)
Operating lease cost$15,309 $15,455 $15,487 
Variable lease cost3,341 4,617 3,205 
Sublease income(143)(687)(456)
Net lease cost$18,507 $19,385 $18,236 
Rent expense for the years ended December 31, 2023, 2022, and 2021, totaled $20.5 million, $17.8 million, and $18.3 million, respectively.
The table below summarizes supplemental information related to the Company’s operating leases:
At or for the Year Ended December 31,
20232022
(Dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases$15,940 $15,830 
Weighted-average remaining lease term - operating leases4.1 years4.7 years
Weighted-average discount rate - operating leases2.79 %2.44 %
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HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The table below summarizes the maturity of remaining lease liabilities:
December 31, 2023
(Dollars in thousands)
2024$15,524 
202513,950 
202613,252 
20277,745 
20282,943 
2029 and thereafter2,542 
Total lease payments55,956 
Less: imputed interest3,286 
Total lease obligations$52,670 
At December 31, 2023, the Company had no operating lease commitments that had not yet commenced.
The Company did not have any finance leases at December 31, 2023 and 2022.

F-36


HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.    DEPOSITS
Total deposits of $14.75 billion at December 31, 2023, decreased $985.0 million, or 6.3%, from $15.74 billion at December 31, 2022.
The aggregate amount of time deposits in denominations of more than $250 thousand at December 31, 20172023 and 2016,2022, was $1.28$2.24 billion and $1.08$2.39 billion, respectively. Included in time deposits of more than $250 thousand werewas $300.0 million in California State Treasurer’s deposits at December 31, 20172023 and 2016.2022. The California State Treasurer’s deposits are subject to withdrawal based on the State’s periodic evaluations. The Company is required to pledge eligible collateral of at least 110% of outstanding deposits. At December 31, 2017 and 2016,2023, securities with carryingfair values of approximately $337.7$218.7 million and $371.6a $150.0 million respectively,letter of credit issued by the FHLB were pledged as collateral for the California State Treasurer’s deposits. At December 31, 2022, securities with fair values of approximately $348.0 million were pledged as collateral for the California State Treasurer’s deposits.
The Company also utilizes brokered deposits as a secondary source of funds. Total brokeredBrokered deposits at December 31, 20172023 and December 31, 2016,2022, totaled $797.0 million$1.54 billion and $724.7 million,$1.18 billion, respectively. Brokered deposits at December 31, 20172023, consisted of $258.5$164.1 million in money market and NOW accounts and $538.5 million$1.37 billion in time depositsdeposit accounts. Brokered deposits at December 31, 20162022, consisted of $303.7$70.2 million in money market and NOW accounts and $421.0 million$1.11 billion in time depositsdeposit accounts.
At The aggregate amount of unplanned overdrafts of demand deposits that were reclassified as loans was $2.0 million and $1.9 million at December 31, 2017,2023 and 2022, respectively.
At December 31, 2023, the scheduled maturities for time deposits were as follows:
 December 31, 2017
 (Dollars in thousands)
Scheduled maturities in: 
2018$3,855,966
2019376,108
202017,386
202121,054
2022 and thereafter4,149
Total$4,274,663
December 31, 2023
(Dollars in thousands)
Scheduled maturities in:
2024$5,910,485 
202512,914 
20266,742 
2027508 
202818,646 
2029 and thereafter17,462 
Total$5,966,757 
The following table indicatespresents the maturity schedules of time deposits in amounts of more than $250 thousand as ofat December 31, 2017:2023:
December 31, 2023
(Dollars in thousands)
Three months or less$625,801 
Over three months through six months654,165 
Over six months through twelve months951,816 
Over twelve months8,765 
Total$2,240,547 
F-37
 More than $250,000
 (Dollars in thousands)
Three months or less$249,568
Over three months through six months473,313
Over six months through twelve months493,054
Over twelve months63,173
Total$1,279,108

Interest expense on deposits is summarized as follows:
 Year Ended December 31,
 2017 2016 2015
 (Dollars in thousands)
Money market and NOW$31,856
 $21,136
 $12,430
Savings deposits1,354
 1,282
 1,670
Time deposits41,692
 25,673
 19,312
Total deposit interest expense$74,902
 $48,091
 $33,412

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HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8.BORROWINGS
The Company maintains a secured credit facility withInterest expense on deposits for the FHLB against which the Bank may take advances. The borrowing capacityperiods indicated is limited to the lower of 25% of the Bank’s total assets or the Bank’s collateral capacity, which was $3.54 billion and $3.38 billion at December 31, 2017 and 2016, respectively. The terms of this credit facility require the Bank to pledge eligible collateral with the FHLB equal to at least 100% of outstanding advances. The Company also has an unsecured credit facility with the FHLB totaling $91.0 million at December 31, 2017.
Real estate secured loans with a carrying amount of approximately $4.91 billion and $5.53 billion were pledged as collateral for borrowings from the FHLB at December 31, 2017 and 2016, respectively. At December 31, 2017 and 2016, other than FHLB stock, no securities were pledged as collateral for borrowings from the FHLB.
At December 31, 2017 and 2016, FHLB advances were $1.16 billion and $754.3 million, and had a weighted average effective interest rate of 1.63% and 1.22%, respectively which is net of any discounts on acquired borrowing. FHLB borrowing at December 31, 2017 had various maturities through December 2022. At December 31, 2017 and December 31, 2016, $0 and $20.2 million, respectively, of the advances were putable advances. The original rate on FHLB advances as of December 31, 2017 ranged between 0.94% and 2.48%. At December 31, 2017, the Company had a remaining borrowing capacity of $2.32 billion. The Company acquired $200.0 million in FHLB advances from the acquisition of Wilshire during the third quarter of 2016, of which $100.0 million was repaid in the same quarter.
At December 31, 2017, the Company also had $69.9 million in overnight federal funds purchased from lines at other banks. There were no federal funds purchased from other banks at December 31, 2016. Total FHLB advances and federal funds purchased at December 31, 2017 was $1.23 billion compared to $754.3 million at December 31, 2016.
At December 31, 2017, the contractual maturities for FHLB advances and federal funds purchased weresummarized as follows:
Year Ended December 31,
 202320222021
 (Dollars in thousands)
Money market and NOW$152,893 $68,961 $22,867 
Savings deposits8,858 3,802 3,623 
Time deposits279,480 42,076 15,521 
Total deposit interest expense$441,231 $114,839 $42,011 
F-38


December 31, 2017
Scheduled maturities in:(Dollars in thousands)
2018$429,900
2019322,693
2020185,000
2021145,000
2022 and thereafter145,000
Total$1,227,593
As a member of the Federal Reserve Bank system, the Company may also borrow from the Federal Reserve Bank of San Francisco. The maximum amount that we may borrow from the Federal Reserve Bank’s discount window is up to 95% of the outstanding principal balance of the qualifying loans and the fair value of the securities that we pledge. At December 31, 2017, the principal balance of the qualifying loans pledged at the Federal Reserve Bank was $732.0 million and there were no investment securities pledged. There were no borrowings outstanding against this line.

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HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9.    BORROWINGS
9.SUBORDINATED DEBENTURES
At December 31, 2017,2023, borrowings totaled $1.80 billion, compared with $865.0 million at December 31, 2022. All of the Company’s borrowings at December 31, 2023 and December 31, 2022, had maturities of less than 12 months. The tables below summarize the Company’s borrowing lines at December 31, 2023 and 2022:
December 31, 2023
Total
Borrowing Capacity		Borrowings OutstandingAvailable Borrowing Capacity
AmountWeighted Average Rate
(Dollars in thousands)
FHLB$4,167,168 $100,000 5.73 %$4,067,168 
FRB Discount Window630,369 — — %630,369 
FRB Bank Term Funding Program (“BTFP”)1,707,909 1,695,726 4.47 %12,183 
Unsecured Federal Funds lines312,315 — — %312,315 
Total$6,817,761 $1,795,726 4.54 %$5,022,035 
December 31, 2022
Total
Borrowing Capacity		Borrowings OutstandingAvailable Borrowing Capacity
AmountWeighted Average Rate
(Dollars in thousands)
FHLB$4,583,277 $600,000 3.40 %$3,983,277 
FRB Discount Window670,058 265,000 4.50 %405,058 
Unsecured Federal Funds lines451,180 — — %451,180 
Total$5,704,515 $865,000 3.74 %$4,839,515 
The Company maintains a line of credit with the FHLB of San Francisco as a secondary source of funds. The borrowing capacity with the FHLB is limited to the lower of either 25% of the Bank’s total assets or the Bank’s collateral capacity. The terms of this credit facility require the Company to pledge eligible collateral with the FHLB equal to at least 100% of outstanding advances. At December 31, 2023 and 2022, loans with a carrying amount of approximately $7.60 billion and $8.08 billion, respectively, were pledged at the FHLB for outstanding advances and remaining borrowing capacity. At December 31, 2023 and 2022, other than FHLB stock, no securities were pledged as collateral at the FHLB. The purchase of FHLB stock is a prerequisite to become a member of the FHLB system, and the Company is required to own a certain amount of FHLB stock based on total asset size and outstanding borrowings. At December 31, 2023, $100.0 million in FHLB advances had a fixed interest rate until maturity.
As a member of the FRB system, the Bank may also borrow from the FRB discount window. The maximum amount that the Bank may borrow from the FRB’s discount window is up to 99% of the fair market value of the qualifying loans and securities that are pledged. At December 31, 2023, the outstanding principal balance of the qualifying loans pledged at the FRB discount window was $739.9 million. There were no investment securities pledged at the discount window at December 31, 2023.
The Company availed itself of the BTFP, which was created in March 2023 to enhance banking system liquidity by allowing institutions to pledge certain securities at par value and borrow at terms of up to one year, with no prepayment penalties. In 2023, the BTFP was available to federally insured depository institutions in the U.S. at a fixed rate of ten basis points over the one-year overnight index swap rate, but in 2024, the interest rate is no lower than the interest rate on reserve balances in effect on the day the loan is made. At December 31, 2023, the Company had a total par value of $1.71 billion in investment securities that were pledged under the BTFP.
The Company also maintains unsecured federal funds borrowing lines with other banks. There were no borrowings outstanding from other banks at December 31, 2023 and 2022.
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HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10.    CONVERTIBLE NOTES AND SUBORDINATED DEBENTURES
Convertible Notes
In 2018, the Company issued $217.5 million aggregate principal amount of 2.00% convertible senior notes maturing on May 15, 2038, in a private offering to qualified institutional buyers under Rule 144A of the Securities Act of 1933. The convertible notes can be converted into shares of the Company’s common stock at an initial rate of 45.0760 shares per $1,000 principal amount of the notes (equivalent to an initial conversion price of approximately $22.18 per share of common stock, which represented a premium of 22.50% to the closing stock price on the date of the pricing of the notes). Holders of the convertible notes had the option to convert all or a portion of the notes at any time on or after February 15, 2023. The convertible notes were callable by the Company, in part or in whole, on or after May 20, 2023, for 100% of the principal amount in cash. Holders of the convertible notes also have the option to put the notes back to the Company on May 15, 2028, or May 15, 2033, for 100% of the principal amount in cash. The convertible notes can be settled in cash, stock, or a combination of stock and cash at the option of the Company.
On May 15, 2023, most of the Company’s holders of the convertible notes elected to exercise their optional put right and the Company paid off $197.1 million principal amount of notes in cash. In addition, during the year ended December 31, 2023, the Company repurchased its notes in the aggregate principal amount of $19.9 million and recorded a gain on debt extinguishment of $405 thousand. The repurchased notes were immediately cancelled subsequent to the repurchase. These repurchases are separate from the optional put and were made through a third-party broker.
The convertible notes issued by the Company were initially separated into a debt component and an equity component, which represented the stock conversion options. In 2021, the Company early adopted ASU 2020-06 under the modified retrospective approach, subsequent to which, the Company now accounts for its convertible notes as a single debt instrument. At the adoption of ASU 2020-06, portions previously allocated to equity and the remaining convertible notes discount, which were both attributable to the equity component, were reversed. The reversal of the equity portions of the convertible notes totaled $18.3 million, net of taxes, which was recorded as a reduction to additional paid-in capital. The adoption of ASU 2020-06 also resulted in a $10.7 million net positive adjustment to beginning retained earnings.
The value of the convertible notes at issuance and the carrying value at December 31, 2023, 2022 and 2021, are presented in the tables below:
Capitalization
Period		Gross
Carrying
Amount		December 31, 2023
Total CapitalizationCarrying Amount
(Dollars in thousands)
Convertible notes principal balance$444 $— $444 
Issuance costs to be capitalized5 years— — — 
Carrying balance of convertible notes$444 $— $444 
Capitalization
Period		Gross
Carrying
Amount		December 31, 2022
Total CapitalizationCarrying Amount
(Dollars in thousands)
Convertible notes principal balance$217,500 $— $217,500 
Issuance costs to be capitalized5 years(4,119)3,767 (352)
Carrying balance of convertible notes$213,381 $3,767 $217,148 
F-40


HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Capitalization
Period		Gross
Carrying
Amount		December 31, 2021
Accumulated CapitalizationCarrying Amount
(Dollars in thousands)
Convertible notes principal balance$217,500 $— $217,500 
Issuance costs to be capitalized5 years(4,119)2,828 (1,291)
Carrying balance of convertible notes$213,381 $2,828 $216,209 
Interest expense on the convertible notes for the years ended December 31, 2023, 2022 and 2021, totaled $1.9 million, $5.3 million, and $5.3 million, respectively. Interest expense for the Company’s convertible notes consisted of accrued interest on the convertible note coupon and interest expense from capitalized issuance costs. Issuance cost capitalization expense was recorded for only the first five outstanding years of the convertible notes.
Subordinated Debentures
At December 31, 2023, the Company had nine wholly-owned subsidiary grantor trusts that had issued $126.0 million of pooled trust preferred securities. Trust preferred securities accrue and pay distributions periodically at specified annual rates as provided in the indentures. The trusts used the net proceeds from the offering to purchase a like amount of subordinated debentures (the “Debentures”) of the Company.debentures. The Debenturessubordinated debentures are the sole assets of the trusts. The Company’s obligations under the subordinated debentures and related documents, taken together, constitute a full and unconditional guarantee by the Company of the obligations of the trusts. The trust preferred securities are mandatorily redeemable upon the maturity of the Debentures,subordinated debentures, or upon earlier redemption as provided in the indentures. The Company has the right to redeem the Debenturessubordinated debentures in whole (but not in part) on or after specific dates,a quarterly basis at a redemption price specified in the indentures plus any accrued but unpaid interest to the redemption date. The Company also has a right to defer consecutive payments of interest on the subordinated debentures for up to five years.
The following table is a summary of trust preferred securities and subordinated debentures at December 31, 2017:2023:
Issuance TrustIssuance DateTrust Preferred Security AmountCarrying Value of Subordinated DebenturesRate TypeCurrent RateMaturity Date
(Dollars in thousands)
Nara Capital Trust III06/05/2003$5,000 $5,155 Variable8.796%06/15/2033
Nara Statutory Trust IV12/22/20035,000 5,155 Variable8.505%01/07/2034
Nara Statutory Trust V12/17/200310,000 10,310 Variable8.589%12/17/2033
Nara Statutory Trust VI03/22/20078,000 8,248 Variable7.296%06/15/2037
Center Capital Trust I12/30/200318,000 15,197 Variable8.505%01/07/2034
Wilshire Trust II03/17/200520,000 16,681 Variable7.429%03/17/2035
Wilshire Trust III09/15/200515,000 11,931 Variable7.046%09/15/2035
Wilshire Trust IV07/10/200725,000 19,245 Variable7.026%09/15/2037
Saehan Capital Trust I03/30/200720,000 15,903 Variable7.212%06/30/2037
Total$126,000 $107,825 
The carrying value of the subordinated debentures at December 31, 2023 and 2022, was $107.8 million and $106.6 million, respectively. At December 31, 2023 and 2022, acquired subordinated debentures had remaining discounts of $22.1 million and $23.3 million, respectively. The carrying balance of the subordinated debentures is net of remaining discounts and includes common trust securities.
F-41

Issuance Trust
Issuance
Date
Trust
Preferred
Security
Amount

Subordinated
Debentures
Amount

Rate
Type

Current
Rate
Maturity
Date
    (Dollars in thousands)      
Nara Capital Trust III
06/05/2003
$5,000

$5,155

Variable
4.74%
06/15/2033
Nara Statutory Trust IV
12/22/2003
5,000

5,155

Variable
4.21%
01/07/2034
Nara Statutory Trust V
12/17/2003
10,000

10,310

Variable
4.55%
12/17/2033
Nara Statutory Trust VI
03/22/2007
8,000

8,248

Variable
3.24%
06/15/2037
Center Capital Trust I
12/30/2003
18,000

13,827

Variable
4.21%
01/07/2034
Wilshire Statutory Trust II 03/17/2005 20,000
 15,314
 Variable 3.39% 03/17/2035
Wilshire Statutory Trust III 09/15/2005 15,000
 10,767
 Variable 2.99% 09/15/2035
Wilshire Statutory Trust IV 07/10/2007 25,000
 17,479
 Variable 2.97% 09/15/2037
Saehan Capital Trust I 03/30/2007 20,000
 14,598
 Variable 3.31% 06/30/2037
TOTAL ISSUANCE


$126,000

$100,853







HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company’s investment in the common trust securities of the issuer trusts ofwas $3.9 million at both December 31, 20172023 and December 31, 2016, is2022, and was included in other assets.“Other assets” on the Company’s Consolidated Statements of Financial Condition. Although the subordinated debtdebentures issued by the trusts are not included as a component of stockholders’ equity in the consolidated balance sheets,Consolidated Statements of Financial Condition, the debt is treated as capital for regulatory purposes. The Company’s trust preferred security debt issuances (less common trust securities) are includable in Tier I1 capital up to a maximum of 25% of capital on an aggregate basis. Any amount that exceeds 25% qualifiesbasis, as Tier 2 capital.
Under the “Merger and Acquisition Transition Provisions”they were grandfathered in under BASEL III, if a depository institution holding company of $15 billion or more acquires a depository institution holding company with total consolidated assets of less than $15 billion as of December 31, 2009, the non-qualifying capital instruments of the resulting organization will be subject to a phase-out schedule. The phase-out schedule ended in 2016 and therefore in accordance with BASEL III, the Company’s subordinated debenture will no longer qualify for Tier 1 treatment once the Company exceeds total consolidated assets of $15 billion or more since the Company had acquisitions subsequent to December 31, 2009. The subordinated debentures will be still be eligible for Tier 2 inclusion once the Company exceeds $15 billion or more in total consolidated assets.


III.
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Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11.    INCOME TAXES
10.INCOME TAXES
The following presents a summary of income tax provision follows for the years ended December 31:
 Current Deferred Total
 (Dollars in thousands)
2017     
Federal$64,910
 $31,464
 $96,374
State24,739
 3,276
 28,015
 $89,649
 $34,740
 $124,389
2016     
Federal$50,780
 $4,198
 $54,978
State20,922
 1,552
 22,474
 $71,702
 $5,750
 $77,452
2015     
Federal$47,919
 $(1,393) $46,526
State16,548
 17
 16,565
 $64,467
 $(1,376) $63,091
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). Among other changes, the Tax Act reduces the U.S. federal corporate tax rate from 35% to 21%. The Company has not yet completed accounting for the tax effects of enactment of the Tax Act; however, the Company has reasonably estimated the effects of the Tax Act and recorded provisional amounts in the Company’s financial statements as of December 31, 2017 in accordance with SEC Staff Accounting Bulletin No. 118 (“SAB 118”). The Company recorded a provisional amount increasing income tax provision expense by $25.4 million, included in federal deferred income tax provision for the year ended December 31, 2017 in the table above. This amount is comprised of the re-measurement of federal net deferred tax assets and re-evaluation of investments in affordable housing partnerships resulting from the permanent reduction in the U.S. statutory corporate tax rate to 21% from 35%. The Company is still completing its analysis of the impact of the Tax Act and will record any adjustments to the provisional amount as a component of income tax expense during the measurement period provided for in SAB 118.
CurrentDeferredTotal
 (Dollars in thousands)
2023
Federal$22,076 $3,158 $25,234 
State17,998 982 18,980 
$40,074 $4,140 $44,214 
2022
Federal$52,676 $(6,366)$46,310 
State34,050 (2,589)31,461 
$86,726 $(8,955)$77,771 
2021
Federal$28,382 $12,599 $40,981 
State22,692 7,027 29,719 
$51,074 $19,626 $70,700 
A reconciliation of the difference between the federal statutory income tax rate and the effective tax rate is shown in the following table for the years ended December 31:indicated:
Year Ended December 31,
202320222021
Statutory tax rate21.00 %21.00 %21.00 %
State taxes-net of federal tax effect8.79 %8.58 %8.59 %
CRA investment tax credit(4.67)%(2.99)%(3.75)%
Bank owned life insurance(0.24)%(0.22)%(0.17)%
Tax exempt municipal bonds and loans(0.82)%(0.26)%(0.17)%
State tax rate change0.02 %0.15 %(0.04)%
Changes in uncertain tax positions(0.59)%(0.23)%0.07 %
Other1.37 %0.24 %0.15 %
Effective income tax rate24.86 %26.27 %25.68 %

F-43
 Year Ended December 31,
 2017 2016 2015
Statutory tax rate35.00 % 35.00 % 35.00 %
State taxes-net of federal tax effect7.04 % 7.28 % 7.21 %
Rate change - federal and state9.36 % — % — %
CRA investment tax credit(3.50)% (2.40)% (1.31)%
Bank owned life insurance(0.09)% (0.26)% (0.25)%
Municipal securities(0.45)% (0.22)% (0.15)%
Nondeductible transaction costs(0.02)% 0.80 % — %
Other(0.19)% 0.31 % 0.11 %
Effective income tax rate47.15 % 40.51 % 40.61 %



F-54
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Deferred tax assets and liabilities at December 31, 20172023 and 2016 are2022, were comprised of the following:
At December 31,
2017 2016
December 31,December 31,
202320232022
(Dollars in thousands) (Dollars in thousands)
Deferred tax assets:   
Purchase accounting fair value adjustment$21,508
 $42,009
Depreciation
Depreciation
Depreciation
Statutory bad debt deduction less than financial statement provision20,162
 26,574
Net operating loss carryforward2,351
 4,171
Statutory bad debt deduction less than financial statement provision
Statutory bad debt deduction less than financial statement provision
Net operating loss carry-forward
Investment security provision593
 1,646
State tax deductions4,304
 5,669
Accrued compensation149
 207
Deferred compensation214
 348
Mark to market on loans held for sale764
 1,244
Depreciation221
 3,157
Nonaccrual loan interest6,272
 7,330
Other real estate owned1,753
 1,507
FDIC loss share receivable362
 772
Unrealized loss on securities available for sale8,961
 9,989
Non-qualified stock option and restricted share expense1,339
 2,187
Goodwill203
 490
Lease liabilities
Unrealized loss on securities AFS
Other3,053
 7,063
Total Deferred Tax Assets$72,209
 $114,363
Total deferred tax assets
Deferred tax liabilities:   
Deferred tax liabilities:
Deferred tax liabilities:
Purchase accounting fair value adjustment
Purchase accounting fair value adjustment
Purchase accounting fair value adjustment
Depreciation
FHLB stock dividends$(695) $(1,054)
Deferred loan costs(5,857) (7,085)
State taxes deferred and other(3,229) (6,629)
Prepaid expenses(1,542) (1,840)
Amortization of intangibles(5,236) (8,639)
Lease expense(447) (1,006)
Total Deferred Tax Liabilities$(17,006) $(26,253)
Net deferred tax assets:$55,203
 $88,110
ROU assets
Total deferred tax liabilities
Total deferred tax liabilities
Total deferred tax liabilities
Net deferred tax assets
Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of any cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions. This analysis is updated quarterly and adjusted as necessary.
Based on the analysis, the Company has determined that a valuation allowance for deferred tax assets was not required as of at December 31, 20172023 and 2016.

2022.
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Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of the Company’s net operating loss carry-forwards at December 31, 2023 and 2022, is as follows:
 FederalState
 Remaining
Amount		ExpiresAnnual
Limitation		Remaining
Amount		ExpiresAnnual
Limitation
 (Dollars in thousands)
2023
Saehan Bank (acquired by Wilshire)$1,583 2030$226 $2,035 2032$226 
Pacific International Bank3,570 2032420 — N/A— 
Total$5,153 $646 $2,035 $226 
2022
Saehan Bank (acquired by Wilshire)$1,809 2030$226 $2,261 2032$226 
Pacific International Bank3,989 2032420 — N/A— 
Total$5,798 $646 $2,261 $226 
  Federal State
  
Remaining
Amount
 Expires 
Annual
Limitation
 
Remaining
Amount
 Expires 
Annual
Limitation
 
  (Dollars in thousands)
 2017           
 Saehan Bank (acquired by Wilshire)$2,940
 2030 $226
 $2,940
 2030 $226
 Korea First Bank of New York991
 2019 497
 —
 N/A —
 Pacific International Bank6,089
 2032 420
 —
 N/A —
 Total$10,020
   $1,143
 $2,940
   $226
             
 2016           
 Saehan Bank (acquired by Wilshire)$3,166
 2030 $226
 $3,166
 2030 $226
 Korea First Bank of New York1,488
 2019 497
 —
 N/A —
 Pacific International Bank6,509
 2032 420
 —
 N/A —
 Total$11,163
   $1,143
 $3,166
   $226

In 2020, the California Assembly Bill 85 (A.B. 85) was signed into law. A.B. 85 suspends the use of the net operating loss (“NOL”) for the 2020, 2021, and 2022 tax years. For NOL incurred in tax years before 2020 for which a deduction is denied, the carryover period is extended by three years. On February 9, 2022, Senate Bill 113 (“S.B. 113”) was signed into law, and among other changes, S.B. reinstates the California NOL deductions for tax years beginning in 2022, in effect shortening the suspension period for NOL deductions from A.B. 85 by one year.
The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of the state of California and various other states. The statute of limitations for the assessment of taxes for the consolidated Federal income tax return is closed for all tax years up to and including 2013.2019. The expiration of the statute of limitations for the assessment of taxes for the various state income and franchise tax returns for the Company and subsidiaries varies by state. The Company is currently under examination by the New York City Department of Finance for the 2016, 2017 and 2018 tax years. While the outcome of the examination is unknown, the Company expects no material adjustments. During 2023, The California Franchise Tax Board (FTB)concluded an examination for the 2011, 2012, and 20132017 tax years and by the New York State Department of Taxation for the 2013, 2014, and 2015 tax years. Wilshire Bancorp Inc. is currently under examination by the FTB for the 2011, 2012, and 2013 tax years. While the outcomes of the examinations are unknown, the Company does not expect anyyear with no material adjustments.
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 20172023 and 20162022, is as follows:
 At December 31,
 2017 2016
 (Dollars in thousands)
Balance at January 1,$2,187
 $1,816
Additions based on tax positions related to the prior year through acquisition3
 1,399
Expiration of the statute of limitations for assessment of taxes—
 (916)
Settlements with taxing authorities(65) (112)
Balance at December 31,$2,125
 $2,187
Year Ended December 31,
20232022
 (Dollars in thousands)
Balance at January 1,$2,951 $3,278 
Additions based on tax positions related to prior years169 434 
Settlement of tax positions related to prior years(1,234)— 
Expiration of statute of limitations(1,417)(761)
Balance at December 31,$469 $2,951 
The total amount of unrecognized tax benefits was $2.1$469 thousand at December 31, 2023, and $3.0 million at December 31, 2017 and $2.2 million at December 31, 2016 and is primarily for uncertainties related to California enterprise zone loan interest deductions taken in prior years.2022. The total amount of tax benefits, that, if recognized, would favorably impact the effective tax rate was $1.9 millionby $434 thousand and $1.6$2.6 million at December 31, 20172023 and 2016,2022, respectively. The Company expectsManagement believes it is reasonably possible that the total amount of unrecognized tax benefits tomay decrease by $2.1 millionapproximately $177 thousand within the next twelve months due to thean anticipated settlement with thea state tax authority.
The Company recognizes interestauthority and penalties related to income tax matters in income tax expense. The Company had approximately $348 thousand and $306 thousand for interest and penalties accrued at December 31, 2017 and 2016, respectively.

the expiration of statute of limitations.
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Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.    STOCK-BASED COMPENSATION
11.STOCK-BASED COMPENSATION
The Company has aIn 2019, the Company’s stockholders approved the 2019 stock-based incentive plan (the “2016“2019 Plan”) to award equity as a form of compensation. The 2016 Plan, was approved by the Company’s stockholders on September 1, 2016. The 2016 Plan, which provides for grants of stock options, stock appreciation rights (“SARs”), restricted stock, performance shares, and performance units (sometimes referred to individually or collectively as “awards”) to non-employee directors employees, and consultants ofemployees the Company. Stock options may be either incentive stock options (“ISOs”), as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or nonqualified stock options (“NQSOs”). Stock options and restricted stock were assumed from the merger of Wilshire at substantially the same terms as those prior to the merger after applying the exchange ratio of 0.7034. These stock awards were issued to former Wilshire employees and directors through the 2016 Plan.
The 20162019 Plan givesprovides the Company flexibility to (i) attract and retain qualified non-employee directors, executives and other key employees and consultants with appropriate equity-based awards to;awards; (ii) motivate high levels of performance; (iii) recognize employeeemployees’ contributions to the Company’s success; and (iv) align the interests of the 2016 Plan participants with those of the Company’s stockholders. The plan2019 Plan initially had 2,400,0004,400,000 shares that were available for grant to participants. In 2023, an additional 150,000 shares of common stock were made available to be issued in connection with grants of restricted stock to be granted as inducement awards for potential new employment with the Company under the 2019 Plan as Exempt Awards and pursuant to Nasdaq Listing Rule 5635(c)(4); this pool was not previously approved by stockholders. These additional shares are not available to persons who previously served as an employee or director of the Company, other than following a bona fide period of non-employment. The Company has not issued, and does not expect to issue, any shares under this 150,000 inducement award pool. At December 31, 2023, there were 121,962 remaining shares available for future grants under the 2019 plan, excluding the 150,000 shares for inducement awards. The pool of available shares can be partially replenished for future grants to the extent there are forfeitures, expirations or otherwise terminations of existing equity awards without issuance of the shares underlying such awards. The exercise price for shares under an ISO may not be less than 100% of fair market value on the date the award is granted under Code Section 422.the Code. Similarly, under the terms of the 20162019 Plan, the exercise price for SARs and NQSOs may not be less than 100% of fair market value on the date of grant. Performance units are awarded to a participantparticipants at the market price of the Company’s common stock on the date of award, (afterafter the lapse of the restriction period and the attainment of the performance criteria). No minimum exercise price is prescribed for performance shares and restricted stock awarded under the 2016 Plan.criteria. All options not exercised generally expire 10 years after the date of grant.
ISOs, SARs, and NQSOs have vesting periods of three to five years and have 10-year contractual terms. Restricted stock, performance shares, and performance units will beare granted with a restriction period of not less than one year from the grant date for performance-based awards and not more than three years from the grant date for time-based vesting of grants. Compensation expense for awards is recordedrecognized over the vesting period. The grant date fair value of stock option awards are estimated on the date of grant using the Black-Scholes option valuation model. The expected life (estimated period of time outstanding) of options is estimated using the simplified method. The expected volatility is based on historical volatility for a period equal to the stock option’s expected life. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant.period.
The Company had another stock-based incentive plan, the 2007 Equity Incentive Plan (“2007 Plan”), which was approved by stockholders in May 2007. Under the terms of this plan, awards cannot be granted under the plan more than ten years after the plan adoption date. Therefore, subsequent to May 2017, equity awards can no longer be issued from this plan.
The 2016 plan has 1,341,621 shares available for future grants as of December 31, 2017.
The total shares reserved for issuance will serve as the underlying value for all equity awards under the 2016 Plan. With the exception of the shares that are underlying stock options and restricted stock awards, the boardBoard of directorsDirectors may choose to settle the awards by paying the equivalent cash value or awardingby delivering the appropriate number of shares. For the year ended December 31, 2017, 165,612 shares of restricted and performance unit awards were granted under the 2007 and 2016 Plans. The fair value of performance unit awards granted is the fair market value of the Company’s common stock on the date of grant. In 2017, 2016 and 2015, 0, 1,281,552, and 0 options were granted, respectively.
The following is a summary of the Company’s stock option activity under the 2007 and 2016 Plans for the year ended December 31, 2017:2023:
Number of
Shares
 
Weighted-
Average
Exercise
Price Per
Share
 
Weighted-
Average
Remaining
Contractual
Life (Years)
 
Aggregate
Intrinsic
Value
Outstanding - January 1, 20171,603,876
 $15.28
  
Number of SharesNumber of SharesWeighted-Average Exercise Price Per ShareWeighted-Average
Remaining Contractual Life (Years)		Aggregate Intrinsic Value
(Dollars in thousands)
Outstanding - January 1, 2023
Granted
Granted
Granted—
 —
  
Exercised(215,270) 8.46
  
Exercised
Exercised
Expired
Expired
Expired(250,762) 21.61
  
Forfeited(62,421) 17.17
  
Outstanding - December 31, 20171,075,423
 $15.06
 7.26 $3,433,460
Options exercisable - December 31, 2017644,086
 $13.81
 6.54 $2,857,618
Forfeited
Forfeited
Outstanding - December 31, 2023
Outstanding - December 31, 2023
Outstanding - December 31, 2023
Options exercisable - December 31, 2023
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The following is a summary of the Company’s restricted stock and performance unit activity under the 2007 and 2016 Plans for the year ended December 31, 2017:2023:
Number of
Shares
 
Weighted-
Average
Grant
Date Fair
Value
Outstanding - January 1, 2017398,658
 $16.16
Number of SharesNumber of SharesWeighted-Average Grant Date Fair Value
Outstanding (unvested) - January 1, 2023
Granted165,612
 16.77
Vested(149,792) 16.15
Forfeited(35,059) 16.30
Outstanding - December 31, 2017379,419
 $16.42
Outstanding (unvested) - December 31, 2023
The total fair value of restricted stock and performance units vested for the yearyears ended December 31, 2017, 2016,2023, 2022, and 20152021, was $2.7$9.5 million, $1.9$9.7 million, and $899 thousand$9.5 million, respectively.
The amount charged against income related to stock basedstock-based payment arrangements was $3.2$12.3 million, $3.0$12.3 million, and $1.0$8.4 million for the years ended December 31, 2017, 20162023, 2022, and 2015,2021, respectively. The income tax benefit recognized was approximately $3.1 million, $3.2 million, and $2.2 million for the years ended December 31, 2023, 2022, and 2021, respectively.
At December 31, 2017,2023, unrecognized compensation expense related to non-vested stock option grants, restricted stock awards, performance share units and restricted and performance units aggregated $5.5long term incentive plan totaled $11.5 million and iswas expected to be recognized over a remaining weighted average vesting period of 31.5 years.
The estimated annual stock-based compensation expense as of December 31, 2017 for each of the succeeding years is indicated in the table below:
 
Stock Based
Compensation Expense
 (Dollars in thousands)
For the year ended December 31: 
2018$2,757
20191,466
2020864
2021420
202242
Total$5,549

On August, 21, 2017In July 2022, the Company adopteddiscontinued the Hope Employee Stock Purchase Plan (“ESPP”). The ESPP allows, which allowed eligible employees to purchase the Company’s common shares through payroll deductions, which build up between the offering date and the purchase date. At the purchase date, the Company usesused the accumulated funds to purchase shares inof the CompanyCompany’s common stock on behalf of the participating employees at a 10% discount fromto the closing price of the Company’s common shares. The closing price is the lower of either the closing price on the first day of the offering period or on the closing price on the purchase date. The dollar amount of common shares purchased under the ESPP must not exceed 20% of the participating employee’s base salary, subject to a cap of $25 thousand in stock value based on the grant date. The ESPP iswas considered compensatory under GAAP and compensation expense for the ESPP iswas recognized as part of the Company’s stock basedstock-based compensation expenses.expense. No compensation expense was incurred for the ESPP during the year ended December 31, 2023, due to the plan’s discontinuation. The compensation expense for ESPP for the yearyears ended December 31, 20172022 and 2021, was $64 thousand. The Company did not have any compensation expenses for the ESPP in 2016 or 2015.$284 thousand and $431 thousand, respectively.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13.    EMPLOYEE BENEFIT PLANS
12.EMPLOYEE BENEFIT PLANS
Deferred Compensation Plan— Plan—The Company established a deferred compensation plan that permits eligible officers, key executives, and directors to defer a portion of their compensation. The deferred compensation plan is still in effect and was amended in 2007 to be in compliance with the new IRC §409(A) regulations. The deferred compensation, together with accrued accumulated interest, is distributable in cash after retirement or termination of service. The deferred compensation liabilities at December 31, 20172023 and 20162022 amounted to $1.1 million$445 thousand and $1.2 million,$482 thousand, respectively, which areand were included in other liabilities“Other liabilities” in the accompanying consolidated statementsConsolidated Statements of financial condition. Interest expense recognized under the deferred compensation plan totaled $21 thousand, $23 thousand and $25 thousand for 2017, 2016 and 2015, respectively.Financial Condition.
The Company established and the Board approved a Long Term Incentive Plan (“LTIP”) that rewards the namedcertain executive officers (“NEO”) with deferred compensation if the Company meets certain performance goals, the NEOs meet individual performance goals, and the NEOs remain employed for a pre-determined period (between five and ten years, depending on the officer). Only twoAll NEOs are currently participating in the LTIP. The Company accrued $455 thousand, $418liabilities related to the LTIP at December 31, 2023 and 2022, totaled $590 thousand and $306$555 thousand, respectively, and were included in 2017, 2016, and 2015, respectively.
The Company has insured the lives of certain officers and directors who participate“Other liabilities” in the deferred compensation plan. The Company has also purchased life insurance policies and entered into split dollar life insurance agreements with certain directors and officers. Under the termsConsolidated Statements of the split dollar life insurance agreements, a portion of the death benefits received by the Company will be paid to beneficiaries named by the directors and officers.Financial Condition.
401(k) Savings Plan—The Company established a 401(k) savings plan, which is open to all eligible employees who are 21 years old or over and have completed three3 months of service. The Company matches 75% of the first 8% of the employee’s compensation contributed. Employer matching is vested 25% after 2 years of service, 50% after 3 years of service, 75% after 4 years of service, and 100% after 5 or more years of service. Total employer contributions to the plan amounted to approximately $4.4$6.9 million,, $2.6 $5.9 million, and $2.3$5.8 million for 2017, 20162023, 2022, and 2015,2021, respectively.
Post-Retirement Benefit Plans—The Company purchased life insurance policies and entered into split dollar life insurance agreements with certain directors and officers. Under the terms of the split dollar life insurance agreements, a portion of the death benefits received by the Company will be paid to beneficiaries named by the directors and officers. Total death benefits received by the Company was $587 thousand, $1.2 million, and $1.3 million, for 2023, 2022, and 2021, respectively.
In 2016, the Company assumed Wilshire’sWilshire Bank’s Survivor Income PlanPlans which was originally adopted in 2003 and 2005 for the benefit of the directors and officers of the bank in order to encourage their continued employment and service, and to reward them for their past contributions. Wilshire Bank had also entered into separate Survivor Income Agreements with officers and directors relating to the Survivor Income Plan. Under the terms of the Survivor Income Plan, each participant is entitled to a base amount of death proceeds as set forth in the participant’s election to participate, which base amount increases three percent per calendar year, but only until normal retirement age, which is 65. If the participant remains employed after age 65, the death benefit will be fixed at the amount determined at age 65. If a participant has attained age 65 prior to becoming a participant in the Survivor Income Plan, the death benefit shall be equal to the base amount set forth in their election to participate with no increases. We areThe Company is obligated to pay any death benefit owed under the Survivor Income Plan in a lump sum within 90 days following the participant’s death.
In 2011, the Company assumed Center Bank’s Survivor Income Plan which was adopted in 2004 for the benefit of the directors and officers of the bank in order to encourage their continued employment and service, and to reward them for their past contributions. Under the terms of the Survivor Income Plan, each participant is entitled to a base amount of death proceeds as set forth in the participant’s election to participate. We areThe Company is obligated to pay any death benefit owed under the Survivor Income Plan in a lump sum within 90 days following the participant’s death.
The participant’s rights under the Survivor Income Plans terminate upon termination of employment. Upon termination of employment (except for termination for cause), if the participant has achieved the vesting requirements outlined in the plan, the participant will have the option to convert the amount of death benefits calculated at such termination to a split dollar arrangement, provided such arrangement is available under bank regulations and/or tax laws. If available, the BankCompany and the participant will enter into a split dollar agreement and a split dollar policy endorsement. Under such an arrangement, the BankCompany would annually impute income to the officer or the director based on tax laws or rules in force upon conversion. The Company’s accumulated post-retirement benefit obligation at December 31, 20172023, 2022, and 2016,2021 was $7.8$6.3 million, $6.8 million, and $6.6$8.6 million, respectively.

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14.    COMMITMENTS AND CONTINGENCIES
13.COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company leases its premises under non-cancelable operating leases, and at December 31, 2017, the future minimum rental commitments under these leases are as follows:
 December 31, 2017
 (Dollars in thousands)
2018$14,055
201912,124
20209,774
20219,426
20225,456
Thereafter15,863
 $66,698
Operating lease expense recorded under such leases in 2017, 2016 and 2015 amounted to approximately $17.8 million, $14.7 million and $11.1 million, respectively.
Legal Contingencies
In the normal course of business, the Company is involved in various legal claims. ManagementThe Company has reviewed all legal claims against the Company with counsel for the fiscal year ended December 31, 2017,2023, and has taken into consideration the views of such counsel as to the potential outcome of the claims. Accrued lossLoss contingencies for all legal claims totaled approximately $414$535 thousand and $557$229 thousand at December 31, 20172023 and December 31, 2016,2022, respectively. It is reasonably possible wethat the Company may incur losses in addition toexcess of the amounts we havecurrently accrued. However, at this time, we arethe Company is unable to estimate the range of additional losses that are reasonably possible because of a number of factors, including the fact that certain of these litigation matters are still in their early stages and involvestages. Management believes that none of these legal claims, for which, at this point, we believeindividually or in the aggregate, will have little to no merit. Management has considered these and other possible loss contingencies and does not expecta material adverse effect on the amounts to be material to anyresults of operations or financial condition of the consolidated financial statements.Company.
Unfunded Commitments and Letters of Credit
The following table presents a summary of commitments described below, as of the dates indicated below:
December 31,
20232022
(Dollars in thousands)
Unfunded commitments to extend credit$2,274,239 $2,856,263 
Standby letters of credit132,132 132,538 
Other letters of credit51,983 22,376 
Commitments to fund investments in affordable housing partnerships21,017 11,792 
The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit, and other commercial letters of credit.credit, and commitments to fund investments in affordable housing partnerships. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statementsConsolidated Statements of financial condition.Financial Condition. The Company’s exposure to credit loss in the event of nonperformance by the other party toon commitments to extend credit and standby letters of credit and other commercial letters of credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as itthe Company does for extending loan facilities to customers. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’sthe Company’s credit evaluation of the counterparty. Collateral held varies butThe types of collateral that the Company may hold can vary and may include accounts receivable; inventory;receivable, inventory, property, plant and equipment;equipment, and income-producing properties.
Commitments at The estimated exposure to loss from these commitments is included in the reserve for unfunded loan commitments, which is calculated by loan type using estimated line utilization rates based on historical usage. Loss rates for outstanding loans is applied to the estimated utilization rates to calculate the reserve for unfunded loan commitments. At December 31, 20172023 and 2016 are summarized as follows:
 December 31,
 2017 2016
 (Dollars in thousands)
Commitments to Fund Low Income Housing Partnership Investments$38,467
 $24,409
Unused Credit Extensions1,526,981
 1,592,221
Standby Letters of Credit74,748
 63,753
Other Commercial Letters of Credit74,147
 52,125
 $1,714,343
 $1,732,508


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2022, the reserve for unfunded loan commitments amounted to $3.8 million and $1.4 million, respectively.
Commitments and letters of credit generally have variable rates that are tied to the prime rate. The amount of fixed rate commitments is not considered material to this presentation. From time to time, the Company enters into certain types of contracts that contingently require the Company to indemnify parties against third party claims and other obligations customarily indemnified in the ordinary course of the Company’s business. The terms of such obligations vary, and, generally, a maximum obligation is not explicitly stated. Therefore, the overall maximum amount of the obligations cannot be reasonably estimated. The most significant of these contracts relate to certain agreements with the Company’s officers and directors under which the Company may be required to indemnify such persons for liabilities arising out of their employment or directorship relationship. Historically, the Company has not been obligated to make significant payments for these obligations, and no liabilities have been recorded for these obligations in its consolidated statementsConsolidated Statements of financial condition as ofFinancial Condition at December 31, 20172023 and 2016.
Mortgage-Banking Derivatives
The Company enters into various stand-alone mortgage-banking derivatives in order to hedge the risk associated with the fluctuation of interest rates. Changes in fair value are recorded as mortgage banking revenue. Residential mortgage loans funded with interest rate lock commitments and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. At December 31, 2017, the Company had approximately $4.8 million in interest rate lock commitments and $4.8 million in total forward sales commitments for the future delivery of residential mortgage loans. At December 31, 2016, the Company had approximately $23.7 million in interest rate lock commitments and $13.0 million in total forward sales commitments.




2022.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15.    FAIR VALUE MEASUREMENTS
14.FAIR VALUE MEASUREMENTS
Fair value is defined as the exchange price that would be received forto sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants onat the measurement date.date reflecting assumptions that a market participant would use when pricing an asset or liability. There are three levels of inputs that may be used to measure fair value. The fair value inputs of the instruments are classified and disclosed in one of the following categories pursuant to ASC 820:
Level 1 -    Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. The quoted price shall not be adjusted for any blockage factor (i.e., size of the position relative to trading volume).
Level 2 -    Pricing inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Fair value is determined through the use of models or other valuation methodologies, including the use of pricing matrices. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 -    Pricing inputs are unobservable for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
The Company uses the following methods and assumptions in estimating fair value disclosures for financial instruments. Financial assets and liabilities recorded at fair value on a recurring and non-recurring basis are listed as follows:
Investment Securities Available for Sale
The fair values of investment securities available for saleAFS and HTM are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).
The fair valuesvalue of the Company’s Level 3 securities available for sale weresecurity AFS was measured using an income approach valuation technique. The primary inputs and assumptions used in the fair value measurement werewas derived from the securities’security’s underlying collateral, which included discount rates,rate, prepayment speeds, payment delays, and an assessment of the risk of default of the underlying collateral, among other factors. Significant increases or decreases in any of the inputs or assumptions wouldcould result in a significant increase or decrease in the fair value measurement.
Equity Investments With Readily Determinable Fair Value
The fair value of the Company’s equity investments with readily determinable fair value is comprised of mutual funds. The fair value for these investments is obtained from unadjusted quoted prices in active markets on the date of measurement and is therefore classified as Level 1.
Interest Rate SwapsContracts
The Company offers interest rate swapscontracts to certain loan customers to allow them to hedge the risk of rising interest rates on their variable rate loans. The Company originates a variable rate loan and enters into a variable-to-fixed interest rate swapcontract with the customer. The Company also enters into an offsetting swapinterest rate contract with a correspondent bank. These back-to-back agreements are intended to offset each other and allow the Company to originate a variable rate loan, while providing a contract for fixed interest payments for the customer. The net cash flow for the Company is equal to the interest income received from a variable rate loan originated with the customer. The fair value of these derivatives is based on a discounted cash flow approach. The fair value of these derivatives is based on a discounted cash flow approach. The fair value assets and liabilities of centrally cleared interest rate contracts are net of variation margin settled-to-market. Due to the observable nature of the inputs used in deriving the fair value of these derivative contracts, the valuation of interest rate swapscontracts is classified as Level 2.
Impaired
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HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Mortgage Banking Derivatives
Mortgage banking derivative instruments consist of interest rate lock commitments and forward sale contracts that trade in liquid markets. The fair value is based on the prices available from third party investors. Due to the observable nature of the inputs used in deriving the fair value, the valuation of mortgage banking derivatives is classified as Level 2.
Other Derivatives
Other derivatives consist of interest rate contracts designated as cash flow hedges, foreign exchange contracts and risk participation agreements. The fair values of these other derivative financial instruments are based upon the estimated amount the Company would receive or pay to terminate the instruments, taking into account current interest rates, foreign exchange rates and, when appropriate, the current credit worthiness of the counterparties. Fair value assets and liabilities of centrally cleared derivatives are net of variation margin settled-to-market. Interest rate contracts designated as cash flow hedges and foreign exchange contracts, which includes non-deliverable forward contracts, are classified within Level 2 due to the observable nature of the inputs used in deriving the fair value of these contracts. Credit derivatives such as risk participation agreements are valued based on credit worthiness of the underlying borrower, which is a significant unobservable input and therefore is classified as Level 3.
Collateral Dependent Loans
The fair values of impairedcollateral dependent loans are generally measured for impairmentACL using the practical expedients permitted by FASB ASC 310-10-35326-20-35-5 including impairedcollateral dependent loans measured at an observable market price (if available), or at the fair value of the loan’s collateral (if the loan is collateral dependent). Fair value of the loan’s collateral, when the loan is dependent on collateral, is determined by appraisals or independent valuation, less costs to sell of 8.5%. Appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and income approach. Adjustment may be made in the appraisal procsesprocess by the independent appraiser to adjust for differences between the comparable sales and income data available for similar loans

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

and the underlying collateral. For commercial and industrialC&I and asset backed loans, independent valuations may include a 20-60% discount for eligible accounts receivable and a 50-70% discount for inventory. These result in a Level 3 classification.
Derivatives
The fair value of our derivative financial instruments is based on derivative valuation models using market data inputs as of the valuation date that can generally be verified and do not typically involve significant management judgments. (Level 2 inputs).
OREO
OREO is fair valued at the time the loan is foreclosed upon and the asset is transferred to OREO. The value is based primarily on third party appraisals, less costs to sell of up to 8.5% and result in a Level 3 classification of the inputs for determining fair value. OREO is reviewed and evaluated on at least an annuala quarterly basis for additional impairment and adjusted to lower of cost or market accordingly, based on the same factors identified above.
Loans Held forFor Sale
Loans held for sale are carried at the lower of cost or fair value, as determined by outstanding commitments from investors, or based on recent comparable sales (Level 2 inputs), if available, and ifavailable. If Level 2 inputs are not available, carrying values are based on discounted cash flows using current market rates applied to the estimated life and credit risk (Level 3 inputs) or may be assessed based upon the fair value of the collateral, which is obtained from recent real estate appraisals (Level 3 inputs). These appraisals may utilize a single valuation approach or a combination of approaches including the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.
Mortgage Banking Derivatives
F-51
Mortgage banking derivative instruments consist of interest rate lock commitments and forward sale contracts that trade in liquid markets. The fair value is based on the prices available from third party investors. Due to the observable nature of the inputs used in deriving the fair value, the valuation of mortgage banking derivatives are classified as Level 2.

HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Assets and liabilities measured at fair value on a recurring basis are summarized below:
 
Fair Value Measurements at the End of the Reporting Period Using  Fair Value Measurements at the End of
the Reporting Period Using
December 31, 2017
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
 December 31, 2023Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
(Dollars in thousands) (Dollars in thousands)
Assets:






Securities available-for-sale:






Investment securities AFS:
Investment securities AFS:
Investment securities AFS:
U.S. Treasury securities
U.S. Treasury securities
U.S. Treasury securities
U.S. Government agency and U.S.
Government sponsored enterprises:
       
Debt securities$—
 $—
 $—
 $—
Agency securities
Agency securities
Agency securities
Collateralized mortgage obligations838,709

—

838,709

—
Mortgage-backed securities:       
Residential471,214
 —
 471,214
 —
Residential
Residential
Commercial301,365
 —
 301,365
 —
Asset-backed securities
Corporate securities4,475

—

4,475

—
Municipal securities82,537

—

81,429

1,108
Mutual funds21,957

21,957

—

—
Interest rate swaps(2,838) —
 (2,838) —
Equity investments with readily determinable fair value
Interest rate contracts
Mortgage banking derivatives33
 —
 33
 —
Other derivatives
       
Liabilities:       
Interest rate swaps(2,838) —
 (2,838) —
Liabilities:
Liabilities:
Interest rate contracts
Interest rate contracts
Interest rate contracts
Mortgage banking derivatives5
 —
 5
 —
Other derivatives
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  Fair Value Measurements at the End of the Reporting Period Using  Fair Value Measurements at the End of
the Reporting Period Using
December 31, 2016 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 December 31, 2022Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
(Dollars in thousands) (Dollars in thousands)
Assets:       
Securities available for sale:       
Investment securities AFS:
Investment securities AFS:
Investment securities AFS:
U.S. Treasury securities
U.S. Treasury securities
U.S. Treasury securities
U.S. Government agency and U.S.
Government sponsored enterprises:
       
Debt securities$12,008
 $—
 $12,008
 $—
Agency securities
Agency securities
Agency securities
Collateralized mortgage obligations705,667
 —
 705,667
 —
Mortgage-backed securities:       
Residential602,952
 —
 602,952
 —
Residential
Residential
Commercial125,089
 —
 125,089
 —
Asset-backed securities
Corporate securities11,127
 —
 11,127
 —
Municipal securities86,839
 —
 85,700
 1,139
Mutual funds13,058
 13,058
 —
 —
Interest rate swaps(1,565) —
 (1,565) —
Equity investments with readily determinable fair value
Interest rate contracts
Mortgage banking derivatives147
 —
 147
 —
Other derivatives
       
Liabilities:       
Interest rate swaps(1,565) —
 (1,565) —
Liabilities:
Liabilities:
Interest rate contracts
Interest rate contracts
Interest rate contracts
Mortgage banking derivatives41
 —
 41
 —
Other derivatives
There were no transfers between LevelLevels 1, 2, and 3 during the periodyear ended December 31, 20172023 and 2016.

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Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2022.
The table below presents a reconciliation and income statement classification of gains (losses) for the municipal security and losses for all assetsrisk participation agreements measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the yearyears ended December 31, 20172023 and 2016:2022:
Year Ended December 31,
20232022
(Dollars in thousands)
Municipal securities:
Beginning Balance$943 $1,038 
Change in fair value included in other comprehensive income(85)(95)
Ending Balance$858 $943 
Risk participation agreements:
Beginning Balance$32 $93 
Change in fair value included in expense(4)(61)
Ending Balance$28 $32 
F-53
  For the year ended December 31,
  2017 2016
  (Dollars in thousands)
Securities available for sale - municipal securities    
Beginning Balance, January 1 $1,139
 $1,166
Total losses included in other comprehensive income (31) (27)
Ending Balance, December 31 $1,108
 $1,139


Assets measured at fair value on a non-recurring basis at December 31, 2017 and 2016 are summarized below:
  
Fair Value Measurements at the End of the
Reporting Period Using
 December 31, 2017
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
 (Dollars in thousands)
Assets:       
Impaired loans at fair value:       
Real estate$6,086

$—

$—

$6,086
Commercial business3,320

—

—

3,320
Consumer84
 —
 —
 84
Other real estate owned5,615

—

—

5,615
   
Fair Value Measurements at the End of the
Reporting Period Using
 December 31, 2016 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 (Dollars in thousands)
Assets:       
Impaired loans at fair value:       
Real estate$58,882
 $—
 $—
 $58,882
Commercial business6,563
 —
 —
 6,563
Consumer253
 —
 —
 253
Loans held for sale, net3,788
 —
 3,788
 —
Other real estate owned21,990
 —
 —
 21,990

F-65
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company measures certain assets at fair value on a non-recurring basis including collateral dependent loans, loans held for sale, and OREO. These fair value adjustments result from individually evaluated ACL recognized during the period, application of the lower of cost or fair value on loans held for sale, and the application of fair value less cost to sell on OREO.

Assets measured at fair value on a non-recurring basis at December 31, 2023 and 2022, are summarized below:
  Fair Value Measurements at the End of
the Reporting Period Using
 December 31, 2023Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
 (Dollars in thousands)
Assets:
Collateral dependent loans receivable at fair value:
CRE loans$3,475 $— $— $3,475 
C&I loans2,701 — — 2,701 
Loans held for sale, net2,287 — 2,287 — 
OREO63 — — 63 
  Fair Value Measurements at the End of
the Reporting Period Using
 December 31, 2022Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
 (Dollars in thousands)
Assets:
Collateral dependent loans receivable at fair value:
CRE loans$807 $— $— $807 
C&I loans2,744 — — 2,744 
Loans held for sale, net48,795 — 48,795 — 
OREO1,050 — — 1,050 
For assets measured at fair value on a non-recurring basis, the total net (losses) gains,losses, which include charge offs, recoveries, specific reserves,recorded ACL, valuations, and recognized gains and losses on sales recognized in 20172023 and 20162022 are summarized below:
 Year Ended December 31,
 2017 2016
 (Dollars in thousands)
Assets: 
Impaired loans at fair value:   
Real estate$(2,552) $163
Commercial business(5,424) (5,856)
Trade finance(1,187) 1,739
Consumer(912) (713)
Loans held for sale, net12
 2,920
Other real estate owned(1,962) 2,245




 Year Ended December 31,
 20232022
 (Dollars in thousands)
Assets:
Collateral dependent loans receivable at fair value:
CRE loans$(1,511)$(727)
C&I loans(1,968)(2,526)
Loans held for sale, net(798)(3,989)
OREO(315)(941)
F-66
F-54

Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value of Financial Instruments
Carrying amounts and estimated fair values of financial instruments, not previously presented, at December 31, 20172023 and December 31, 20162022, were as follows:
 December 31, 2023
 Carrying AmountEstimated Fair ValueFair Value Measurement Using
 (Dollars in thousands)
Financial Assets:
Cash and cash equivalents$1,928,967 $1,928,967 Level 1
Investment securities HTM263,912 250,518 Level 2
Equity investments without readily determinable fair values39,387 39,387 Level 2
Loans held for sale3,408 3,419 Level 2
Loans receivable, net13,694,925 13,270,444 Level 3
Accrued interest receivable61,720 61,720 Level 2/3
Servicing assets, net9,631 14,853 Level 3
Customers’ liabilities on acceptances471 471 Level 2
Financial Liabilities:
Noninterest bearing deposits$3,914,967 $3,914,967 Level 2
Money market, interest bearing demand and savings deposits4,872,029 4,872,029 Level 2
Time deposits5,966,757 5,974,125 Level 2
FHLB and FRB borrowings1,795,726 1,795,820 Level 2
Convertible notes444 451 Level 1
Subordinated debentures107,825 99,358 Level 3
Accrued interest payable168,174 168,174 Level 2
Acceptances outstanding471 471 Level 2
 December 31, 2022
 Carrying AmountEstimated Fair ValueFair Value Measurement Using
 (Dollars in thousands)
Financial Assets:
Cash and cash equivalents$506,776 $506,776  Level 1
Interest earning deposits in other financial institutions735 733  Level 2
Investment securities HTM271,066 258,407 Level 2
Equity investments without readily determinable fair values38,093 38,093  Level 2
Loans held for sale49,245 49,248  Level 2
Loans receivable, net15,241,181 14,745,881  Level 3
Accrued interest receivable55,460 55,460  Level 2/3
Servicing assets, net11,628 17,375  Level 3
Customers’ liabilities on acceptances818 818  Level 2
Financial Liabilities:
Noninterest bearing deposits$4,849,493 $4,849,493  Level 2
Money market, interest bearing demand and savings deposits5,899,248 5,899,248  Level 2
Time deposits4,990,060 5,020,093  Level 2
FHLB and FRB borrowings865,000 867,088  Level 2
Convertible notes, net217,148 213,937  Level 1
Subordinated debentures106,565 107,944 Level 3
Accrued interest payable26,668 26,668  Level 2
Acceptances outstanding818 818  Level 2
F-55
 December 31, 2017
 
Carrying
Amount

Estimated
Fair Value
 Fair Value Measurement
 (Dollars in thousands)  
Financial Assets:     
Cash and cash equivalents$492,000

$492,000
 Level 1
Interest bearing deposits in other financial institutions
and other investments		53,366
 52,960
 Level 2/3
Loans held for sale29,661

32,048
 Level 2
Loans receivable—net11,018,034

11,112,179
 Level 3
FHLB stock29,776
 N/A
 N/A
Accrued interest receivable29,979
 29,979
 Level 2/3
Servicing assets24,710
 27,511
 Level 3
Customers’ liabilities on acceptances1,691

1,691
 Level 2
Financial Liabilities:     
Noninterest bearing deposits$2,998,734

$2,998,734
 Level 2
Saving and other interest bearing demand deposits3,573,212

3,573,212
 Level 2
Time deposits4,274,663

4,263,585
 Level 2
FHLB advances1,157,693

1,220,529
 Level 2
Federal funds purchased69,900
 69,900
 Level 2
Subordinated debentures100,853

100,853
 Level 2
Accrued interest payable15,961
 15,961
 Level 2
Acceptances outstanding1,691

1,691
 Level 2
      
 December 31, 2016
 Carrying
Amount
Estimated
Fair Value		 Fair Value Measurement
 (Dollars in thousands)  
Financial Assets:     
Cash and cash equivalents$437,334

$437,334
 Level 1
Interest bearing deposits in other financial institutions
and other investments		44,202

43,773
 Level 2/3
Loans held for sale22,785

24,492
 Level 2
Loans receivable—net10,463,989

10,666,642
 Level 3
FHLB stock21,964
 N/A
 N/A
Accrued interest receivable26,880
 26,880
  Level 2/3
Servicing assets26,457
 29,030
  Level 3
Customers’ liabilities on acceptances2,899

2,899
 Level 2
Financial Liabilities:     
Noninterest bearing deposits$2,900,241

$2,900,241
 Level 2
Saving and other interest bearing demand deposits3,703,352

3,703,352
 Level 2
Time deposits4,038,442

4,036,664
 Level 2
FHLB advances754,290

749,486
 Level 2
Subordinated debentures99,808

99,808
 Level 2
Accrued interest payable10,863
 10,863
  Level 2
Acceptances outstanding2,899

2,899
 Level 2


F-67
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company measures assets and liabilities for its fair value disclosures based on an exit price notion. Although the exit price notion represents the value that would be received to sell an asset or paid to transfer a liability, the actual price received for a sale of assets or paid to transfer liabilities could be different from exit price disclosed. The methods and assumptions used to estimate fair value are described as follows:
The carrying amount approximateswas the estimated fair value for cash and cash equivalents, savings and other nonmaturity interest bearing demand deposits, equity investments without readily determinable fair values, customers’ and Bank’s liabilities on acceptances, noninterest bearing deposits, federal funds purchased, subordinated debentures,short-term debt, secured borrowings, and variable rate loans or deposits that reprice frequently and fully. The fair value of loans was determined through a discounted cash flow analysis, which incorporates probability of default and loss given default rates on an individual loan basis. For fixed rate loans, or deposits and for variablethe discount rate loans or deposits with infrequent repricing or repricing limits, fair value isused in a discounted cash flow analysis was based on discountedthe SOFR Swap Rate. For variable loans, the discount rate started with the underlying index rate and an adjustment was made on certain loans, which considered factors such as servicing costs, capital charges, duration, asset type incremental costs, and use of projected cash flows using current market rates applied to the estimated lifeflows. Fair values of residential real estate loans included Fannie Mae and credit risk. The allowance for loan losses is considered to beFreddie Mac prepayment speed assumptions or a reasonable estimate of discount for credit quality concerns. Fair value of SBA loans held for sale isthird-party index based on market quotes. For fair value of non-SBA loans held for sale, see the measurement method discussed previously.historical prepayment speeds. Fair value of time deposits was based on discounted cash flow analyses using recent issuance rates over the prior three months and a market rate analysis of recent offering rates for retail products. Wholesale time deposit fair values incorporated brokered time deposit offering rates. The fair value of the Company’s debt iswas based on current rates for similar financing. Itfinancing with a liquidity premium added to assumed market spreads to reflect exit pricing and the marketability/liquidity costs contained with consummating an orderly transaction. Fair value for the Company’s convertible notes was not practicable to determinebased on the fair valueactual last traded price of FHLB stock due to restrictions placed on their transferability.the notes. The fair value of commitments to fund loans represents fees currently charged to enter into similar agreements with similar remaining maturities and iswas not presented herein. Theherein, as the fair value of these financial instruments iswas not material to the consolidated financial statements.

F-56

F-68
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16.    DERIVATIVE FINANCIAL INSTRUMENTS
15.DERIVATIVE FINANCIAL INSTRUMENTS
As part of the Company’s overall interest rate risk management, the Company enters into derivative instruments, including interest rate swaps, collars, caps, floors, foreign exchange contracts, risk participation agreements and mortgage banking derivatives. The notional amount does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual agreements. Derivative instruments are recognized on the balance sheet at their fair value and are not reported on a net basis.
The tables below present the fair value of the Company’s derivative financial instruments at December 31, 2023 and 2022. The Company’s derivative assets and derivative liabilities are located within “Other assets” and “Other liabilities”, respectively, on the Company’s Consolidated Statements of Financial Condition.
December 31, 2023
Notional
Amount		Fair Value
Other AssetsOther Liabilities
(Dollars in thousands)
Derivatives designated as cash flow hedges
Interest rate swaps$725,000 $— $— 
Interest rate collars250,000 — 1,149 
Forward interest rate swaps1,000,000 10,812 — 
Forward interest rate collars250,000 148 — 
Total$2,225,000 $10,960 $1,149 
Derivatives not designated as hedges
Interest rate contracts with correspondent banks$1,096,292 $53,185 $1,117 
Interest rate contracts with customers1,096,292 1,117 54,505 
Foreign exchange contracts with correspondent banks10,739 4 202 
Foreign exchange contracts with customers1,744 57 — 
Risk participation agreement130,365 — 28 
Mortgage banking derivatives1,377 7 17 
Total$2,336,809 $54,370 $55,869 

(1)    The fair values of centrally-cleared derivative contracts are presented net of settled-to-market margin.

F-57


HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2022
Notional
Amount		Fair Value
Other AssetsOther Liabilities
(Dollars in thousands)
Derivatives designated as cash flow hedges
Interest rate swaps$614,000 $19,773 $1,227 
Forward interest rate swaps111,000 5,428 — 
Forward interest rate collars500,000 182 828 
Total$1,225,000 $25,383 $2,055 
Derivatives not designated as hedges
Interest rate contracts with correspondent banks$1,013,407 $73,059 $330 
Interest rate contracts with customers1,013,407 330 73,059 
Foreign exchange contracts with correspondent banks2,359 79 — 
Foreign exchange contracts with customers2,359 — 73 
Risk participation agreement134,282 — 32 
Mortgage banking derivatives2,801 29 23 
Total$2,168,615 $73,497 $73,517 
Derivatives designated as cash flow hedges
The Company had 23 interest rate contracts at December 31, 2023, with a total notional amount of $2.23 billion designated as cash flow hedges of loans, deposits and borrowings tied to SOFR and Federal Funds. The designated hedged interest rate swap contracts consisted of 15 non-forward starting interest rate swaps with a notional amount of $725.0 million and a weighted average term of 3.1 years, one non-forward starting interest rate option with dealers (collars) with a notional amount of $250.0 million and a weighted average term of 3.0 years, six forward starting interest rate swaps with a notional amount of $1.00 billion and a weighted average term of 3.0 years, and one forward starting interest rate option with dealers (collars) with a notional amount of $250.0 million and a weighted average term of 3.0 years.
The Company had 17 interest rate contracts at December 31, 2022, with a total notional amount of $1.23 billion designated as cash flow hedges of liabilities tied to SOFR and Federal Funds. The designated hedged interest rate swap contracts consisted of 13 non-forward starting interest rate swaps with a notional amount of $614.0 million and a weighted average term of 4.1 years, two forward starting interest rate swaps with a notional amount of $111.0 million and a weighted average term of 3.9 years, and two forward starting interest rate options with dealers (collars) with a notional amount of $500.0 million and a weighted average term of 3.0 years.
The Company’s swaps were determined to be fully effective during the periods presented. The aggregate fair value of the swaps was recorded in assets or liabilities with changes in fair value recorded in other comprehensive income. The gain or loss on derivatives was recorded in AOCI and is subsequently reclassified into interest income and interest expense in the period during which the hedged forecasted transaction affects earnings. Amounts reported in AOCI related to interest rate swap derivatives will be reclassified to interest income and interest expense as interest payments are received or paid on the Company’s derivatives. The Company expects the hedges to remain fully effective throughout the remaining terms. The Company expects to reclassify, during the next 12 months, approximately $2.3 million from AOCI as a decrease to interest income, and $9.8 million from AOCI as a decrease to interest expense.
F-58


HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The table below presents the gains (losses) on derivative instruments designated as cash flow hedges, that were reclassified from AOCI into earnings for the periods indicated:
Year Ended December 31,
Derivative Instruments Designated as Cash Flow HedgesLocation of Gain (Loss)
Recognized in Income		202320222021
(Dollars in thousands)
Interest rate contractsInterest income on cash and deposits at other banks$— $574 $— 
Interest rate contractsInterest income and fees on loans(96)— — 
Interest rate contractsInterest expense on deposits11,589 — — 
Interest rate contractsInterest expense on FHLB and FRB borrowings4,836 1,451 — 
Interest rate contractsSwap fees income— — (319)
Total$16,329 $2,025 $(319)
Total cash held as collateral for interest rate contracts designated as cash flow hedges was $22.9 million at December 31, 2023, and $3.1 million at December 31, 2022.
Derivatives not designated as hedges
The Company’s derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers.
The Company offers a loan hedging program to certain loan customers. Through this program, the Company originates a variable rate loan with the customer. The Company and the customer will then enter into a fixed interest rate swap. Lastly,Simultaneously, an identical offsetting swap is entered into by the Company with a correspondent bank. These “back-to-back” swap arrangements are intended to offset each other and allow the Company to book a variable rate loan, while providing the customer with a contract for fixed interest payments. In these arrangements, the Company’s net cash flow is equal to the interest income received from the variable rate loan originated with the customer. These customer swapsinterest rate contracts are not designated as hedging instruments and are recorded at fair value in other assets and other liabilities. The change in fair value is recognized in the income statement as other income and fees. The Company is required to hold cash as collateral for the interest rate contracts that are not centrally cleared, which is recorded in “Other assets” on the Consolidated Statements of Financial Condition. Total cash held as collateral for back-to-back interest rate contracts was $0 at December 31, 2023, and $9.1 million at December 31, 2022.
The Company offers foreign exchange contracts to customers to purchase and/or sell foreign currencies at set rates in the future. The foreign exchange contracts allow customers to hedge the foreign exchange rate risk of their deposits and loans denominated in foreign currencies. In conjunction with this, the Company enters into offsetting back-to-back contracts with institutional counterparties to hedge the Company’s foreign exchange rate risk. The Company also enters into certain foreign exchange contracts with institutional counterparties, including non-deliverable forward contracts, to manage its foreign exchange rate risk. These foreign exchange contracts are not designated as hedging instruments and are recorded at fair value in other assets and other liabilities. TheDuring the years ended December 31, 2023 and 2022, the changes in fair value areon foreign exchange contracts were a loss of $147 thousand and a gain of $6 thousand, respectively, and were recognized in the income statement inConsolidated Statements of Income as other income and fees.
At December 31, 2017 and 2016,2023, the followingCompany had risk participation agreements with an outside counterparty for interest rate swaps related to our loan hedging program were outstanding:loans in which it is a participant. The risk participation agreements provide credit protection to the financial institution should the borrowers fail to perform on their interest rate derivative contracts. Risk participation agreements are credit derivatives not designated as hedges. Credit derivatives are not speculative and are not used to manage interest rate risk in assets or liabilities. Changes in the fair value of credit derivatives are recognized directly in earnings. The fee received, less the estimate of the loss for credit exposure, is recognized in earnings at the time of the transaction. At December 31, 2023, the notional amount of the risk participation agreements sold was $130.4 million with a credit valuation adjustment of $28 thousand. At December 31, 2022, the notional amount of the risk participation agreements sold was $134.3 million with a credit valuation adjustment of $32 thousand.
F-59

  December 31, 2017 December 31, 2016
  (Dollars in thousands)
Interest rate swaps on loans with loan customers    
Notional amount $274,156
 $223,098
Weighted average remaining term (years) 7.3
 7.4
Received fixed rate (weighted average) 4.34% 4.29%
Pay variable rate (weighted average) 3.74% 3.06%
Estimated fair value $(2,838) $(1,565)
     
Back to back interest rate swaps with correspondent banks    
Notional amount $274,156
 $223,098
Weighted average remaining term (years) 7.3
 7.4
Received variable rate (weighted average) 3.74% 3.06%
Pay fixed rate (weighted average) 4.34% 4.29%
Estimated fair value $2,838
 $1,565


HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company enters into various stand-alone mortgage-banking derivatives in order to hedge the risk associated with the fluctuation of interest rates. Changes in fair value are recorded as mortgage banking revenue. Residential mortgage loans funded with interest rate lock commitments and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. At December 31, 2017 and December 31, 2016,2023, the Company had approximately $4.8 million and $23.7$1.4 million in interest rate lock commitments and $4.8 million and $13.0 million in total forward sales commitments for the future delivery of residential mortgage loans, respectively.
The following table reflectsloans. At December 31, 2022, the notional amountCompany had approximately $2.8 million in interest rate lock commitments and fair value of mortgage banking derivativestotal forward sales commitments for the dates indicated:future delivery of residential mortgage loans.

F-60

 December 31, 2017 December 31, 2016
 Notional Amount Fair Value Notional Amount Fair Value
 (Dollars in thousands)
Assets:       
Interest rate lock commitments$4,795
 $25
 $11,168
 $130
Forward sale contracts related to mortgage banking:$2,452
 $8
 $3,223
 $17
        
Liabilities:       
Interest rate lock commitments$—
 $—
 $1,810
 $3
Forward sale contracts related to mortgage banking:$2,343
 $5
 $9,755
 $38



F-69
Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17.    STOCKHOLDERS’ EQUITY
16.STOCKHOLDERS’ EQUITY
On July 29, 2016 the Company acquired Wilshire in an all-stock transaction. Pursuant to the merger agreement, Wilshire shareholders received 0.7034 shares of the Company’s common stock for each share of Wilshire stock owned. Based on this exchange ratio, 55.5 million shares of the Company’s common stock were issued to Wilshire shareholders at $15.37 per share, the closing price of the Company’s stock on July 29, 2016. As a result, $852.9 million in common stock was issued as consideration in the transaction and $3.4 million in additional paid-in capital was recorded to account for the fair value of stock options and restricted stock assumed. Total stockholders’ equity at December 31, 20172023, was $1.93$2.12 billion, compared to $1.86with $2.02 billion at December 31, 2016.2022. The increase in stockholders’ equity was due primarily to increases in retained earnings from income earned during the year and in AOCI, offset partially by a decrease from cash dividends paid in 2023.
Warrants
TheIn July 2021, the Company’s Board of Directors approved a share repurchase program that authorized the Company assumed certain warrants (related to repurchase $50.0 million of its common stock. In 2021, the TARP Capital Purchase Plan) to purchaseCompany completed the repurchase plan through the repurchase of 3,682,268 shares of common stock totaling $50.0 million. In January 2022, the Company’s common stock. On May 20, 2015,Board of Directors approved another share repurchase program that authorized the U.S. Treasury Department completedCompany to repurchase up to an auction to sell certainadditional $50.0 million of its warrant positions. Thecommon stock, of which $35.3 million remained available at December 31, 2023. During the year ended December 31, 2023, the Company submitted the winning bid todid not repurchase an outstanding warrant to purchase 350,767any shares of the Company’s common stock as part of this program (see Part II, Item 5 “Market for Registrant’s Common Equity, Related Stockholder Matters and repurchased this warrantIssuer Purchases of Equity Securities” for $1.2 million. Asadditional information). Repurchased shares were recorded as treasury stock and reduced the total number of December 31, 2017, the U.S. Treasury Department held one remaining warrant for the purchase of 20,379 shares of the Company’s common stock.stock outstanding.
Dividends
The Company’s Board of Directors approved and the Company paid quarterly dividends of $0.12$0.14 per common share for the first and secondin each quarter of 20172023 and paid dividends of $0.13 per common shares for the third and fourth quarter of 2017.2022. The Company paid aggregate dividends of $67.7$67.1 million and $67.1 million to common shareholdersstockholders in 2017. The Company’s Board of Directors paid quarterly dividends of $0.12 per common share for the fourth quarter of 20162023 and $0.11 per common share for the first three quarters of 2016. The Company paid aggregate dividends of $42.5 million to common shareholders during 2016.2022, respectively.
Accumulated Other Comprehensive LossIncome (Loss)
The following table presents the changes to accumulated other comprehensive loss atAOCI for the years ended December 31, 2017, 2016,2023, 2022, and 2015:2021:
Year Ended December 31,
202320222021
(Dollars in thousands)
Balance at beginning of period$(230,857)$(11,412)$32,753 
Unrealized net gains (losses) on securities AFS32,543 (297,919)(65,551)
Unrealized net losses on securities AFS transferred to HTM— (36,576)— 
Unrealized net gains on interest rate swaps used for cash flow hedge17,024 23,062 2,893 
Reclassification adjustments for net (gains) losses realized in net income(12,514)253 319 
Tax effect(10,934)91,735 18,174 
Other comprehensive income (loss), net of tax26,119 (219,445)(44,165)
Balance at end of period$(204,738)$(230,857)$(11,412)
 December 31, 2017 December 31, 2016 December 31, 2015
 (Dollars in thousands)
Balance at beginning of period$(14,657) $(1,832) $1,705
Unrealized losses on securities available for sale
   and interest only strips
(5,796) (21,273) (5,717)
Reclassification adjustments for gains realized in income(301) (950) (424)
Less tax benefit(2,570) (9,398) (2,604)
  Total other comprehensive loss(3,527) (12,825) (3,537)
Reclassification from AOCI to retained earnings due to
tax reform		$(3,597) $—
 $—
Balance at end of period$(21,781) $(14,657) $(1,832)
The reclassification adjustments were recognizedReclassifications for net gains and losses realized in net income for the years ended December 31, 2023, 2022, and 2021, related to net gains on sales or calledinterest rate contracts designated as cash flow hedges and amortization on unrealized losses from transferred investment securities available for saleto HTM. Gains and losses on interest rate contracts are recorded in interest income, interest expense and noninterest income under other income and fees in the consolidated statementsConsolidated Statements of income. As permitted by ASU 2018-02,Income. The unrealized holding losses at the Company made the electiondate of transfer on securities HTM will continue to reclassify $3.6 millionbe reported, net of taxes, in disproportionate tax effects in accumulated other comprehensive income that resulted from the reduction in corporate tax ratesAOCI as a resultcomponent of stockholders’ equity and be amortized over the remaining life of the Tax Act to retained earnings forsecurities as an adjustment of yield, offsetting the impact on yield of the corresponding discount amortization.
For the year ended December 31, 2017. The Tax Act, which was enacted on2023, the Company reclassified net gains of $16.3 million from other comprehensive income to interest income and interest expense. For the year ended December 22, 201731, 2022, the Company reclassified net gains of $2.0 million from other comprehensive income to interest income and is effective staring January 1, 2018, permanently reducesinterest expense. For the corporate tax rateyear ended December 31, 2021, the Company reclassified net losses of $319 thousand from 35%other comprehensive income to 21%. The disproportionate tax effect waslosses from cash flow hedge relationships.
For the year ended December 31, 2023, the Company recorded reclassification adjustments as a resultreduction to interest income of the re-evaluation of the Company’s deferred tax assets related$3.8 million from other comprehensive losses to amortize transferred unrealized losses onto investment securities availableHTM, compared with $2.3 million and $0 for salethe same periods in 2022 and interest only strip at the lower tax rate.

2021, respectively.
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HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18.    REGULATORY MATTERS
17.REGULATORY MATTERS
The Company and the Bank are subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiateresult in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a material and adverse effect on the Company’s and the Bank’s business, financial condition and results of operations,operation, such as restrictions on growth or the payment of dividends or other capital distributions or management fees. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
On January 1, 2020, the Company adopted ASU 2016-13 and implemented the CECL methodology. In July, 2013,response to the COVID-19 pandemic, federal regulatory agencies published a final rule that provides the option to delay the cumulative effect of the day 1 impact of CECL adoption on regulatory capital, along with 25% of the change in the adjusted allowance for credit losses (as computed for regulatory capital purposes, which excludes purchased credit deteriorated (“PCD”) loans), for two years, followed by a three-year phase-in period. The Company has elected the five-year transition period consistent with the final rule issued by the federal bank regulatory agencies adopted final regulations, which revised their risk-based and leverage capital requirements for banking organizations to meet requirements of Dodd-Frank and to implement Basel III international agreements reached by the Basel Committee. The final rules began for the Company and the Bank on January 1, 2015 and are subject to a phase-in period through January 1, 2019. The final rules that had an impact on the Company and the Bank include:
An increase in the minimum Tier 1 capital ratio from 4.00% to 6.00% of risk-weighted assets;
A new category and a required 4.50% of risk-weighted assets ratio is established for “Common Equity Tier 1” as a subset of Tier 1 capital limited to common equity;
A minimum non-risk-based leverage ratio is set at 4.00%, eliminating a 3.00% exception for higher rated banks;
Changes in the permitted composition of Tier 1 capital to exclude trust preferred securities, mortgage servicing rights and certain deferred tax assets and include unrealized gains and losses on available-for-sale debt and equity securities;
The risk-weights of certain assets for purposes of calculating the risk-based capital ratios are changed for high volatility commercial real estate acquisition, development and construction loans, certain past due non-residential mortgage loans and certain mortgage-backed and other securities exposures; and
A new additional capital conservation buffer of 2.5% of risk weighted assets over each of the required capital ratios is being phased in from 2016 to 2019 and must be met to avoid limitations on the ability of the Bank to pay dividends, repurchase shares, or pay discretionary bonuses. The capital conservation buffer for the Company was initially 0.625% in 2016, and increases 0.625% annually until 2019. As ofagencies. At December 31, 2017, the capital conservation buffer for the Company stood at 1.25%.
As of December 31, 2017,2023, the ratios for the Company and the Bank arewere sufficient to meet the fully phased-in conservation buffer.
As ofAt December 31, 20172023 and 2016,2022, the most recent regulatory notification categorizedBank’s capital levels exceeded the Bank asminimums necessary to be considered “well-capitalized” under the regulatory framework for prompt corrective action. To generally be categorized as “well-capitalized”, the Bank must maintain a minimum total risk-based,capital ratio, Tier I risk-based,1 capital ratio, common equity Tier 1 capital ratio, and Tier I leverage ratiosratio as set forth in the following table. There are noManagement is not aware of any conditions or events since the most recent notification from regulators that management believes has changed the institution’s category. As of December 31, 2017 and 2016,2023 that would cause management to believe the Company and the Bank met theinstitution would be considered to be in a lower capital adequacy requirements to which they are subject.category.



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HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s and the Bank’s actual capital amountslevels and regulatory ratios are presented in the table below:tables below for the dates indicated and include the effects of the Company’s election to utilize the five-year transition described above:
 ActualRatio Required for Capital Adequacy PurposesRatio Required To Be Well-CapitalizedRatio Required for Minimum Capital Adequacy With Capital Conservation Buffer
December 31, 2023AmountRatio
 (Dollars in thousands)
Common equity Tier 1 capital
(to risk weighted assets):
Company$1,869,774 12.28 %4.50 %N/A7.00 %
Bank$1,940,303 12.75 %4.50 %6.50 %7.00 %
Tier 1 capital
(to risk-weighted assets):
Company$1,973,698 12.96 %6.00 %N/A8.50 %
Bank$1,940,303 12.75 %6.00 %8.00 %8.50 %
Total capital
(to risk-weighted assets):
Company$2,120,157 13.92 %8.00 %N/A10.50 %
Bank$2,086,762 13.71 %8.00 %10.00 %10.50 %
Leverage capital
(to average assets):
Company$1,973,698 10.11 %4.00 %N/AN/A
Bank$1,940,303 9.94 %4.00 %5.00 %N/A
 ActualRatio Required for Capital Adequacy PurposesRatio Required To Be Well-CapitalizedRatio Required for Minimum Capital Adequacy With Capital Conservation Buffer
December 31, 2022AmountRatio
 (Dollars in thousands)
Common equity Tier 1 capital
(to risk weighted assets):
Company$1,799,020 10.55 %4.50 %N/A7.00 %
Bank$2,049,973 12.03 %4.50 %6.50 %7.00 %
Tier 1 capital
(to risk-weighted assets):
Company$1,901,685 11.15 %6.00 %N/A8.50 %
Bank$2,049,973 12.03 %6.00 %8.00 %8.50 %
Total capital
(to risk-weighted assets):
Company$2,041,319 11.97 %8.00 %N/A10.50 %
Bank$2,189,607 12.85 %8.00 %10.00 %10.50 %
Leverage capital
(to average assets):
Company$1,901,685 10.15 %4.00 %N/AN/A
Bank$2,049,973 10.94 %4.00 %5.00 %N/A
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 Actual 
Required
For Capital
Adequacy Purposes
 Minimum Capital Adequacy With Capital Conservation Buffer 
Required To Be Well
Capitalized under
Prompt Corrective
Action Provisions
 Amount Ratio Amount Ratio Amount Ratio Amount Ratio
 (Dollars in thousands)
December 31, 2017               
Common equity tier 1 capital
(to risk-weighted assets):
               
Company$1,471,193
 12.30% $538,435
 4.50% $688
 5.75% N/A
 N/A
Bank$1,548,401
 12.95% $538,178
 4.50% $688
 5.75% $777,368
 6.50%
Total capital
(to risk-weighted assets):
 
  
  
  
      
  
Company$1,653,521
 13.82% $957,217
 8.00% $1,106,782
 9.25% N/A
 N/A
Bank$1,633,778
 13.66% $956,761
 8.00% $1,106,255
 9.25% $1,195,951
 10.00%
Tier I capital
(to risk-weighted assets):
               
Company$1,568,144
 13.11% $717,913
 6.00% $867,478
 7.25% N/A
 N/A
Bank$1,548,401
 12.95% $717,571
 6.00% $687,672
 7.25% $956,761
 8.00%
Tier I capital
(to average assets):
               
Company$1,568,144
 11.54% $543,528
 4.00% N/A
 N/A
 N/A
 N/A
Bank$1,548,401
 11.40% $543,441
 4.00% N/A
 N/A
 $679,301
 5.00%
                
 Actual 
Required
For Capital
Adequacy Purposes
 Minimum Capital Adequacy With Capital Conservation Buffer 
Required To Be Well
Capitalized under
Prompt Corrective
Action Provisions
 Amount Ratio Amount Ratio Amount Ratio Amount Ratio
 (Dollars in thousands)
December 31, 2016               
Common equity tier 1 capital
(to risk-weighted assets):
               
Company$1,400,246
 12.10% $520,917
 4.50% $593,267
 5.125% N/A
 N/A
Bank$1,475,228
 12.75% $520,631
 4.50% $592,941
 5.125% $752,022
 6.50%
Total capital
(to risk-weighted assets):
               
Company$1,578,690
 13.64% $926,076
 8.00% $998,425
 8.625% N/A
 N/A
Bank$1,557,765
 13.46% $925,566
 8.00% $997,876
 8.625% $1,156,957
 10.00%
Tier I capital
(to risk-weighted assets):
               
Company$1,496,153
 12.92% $694,557
 6.00% $766,906
 6.625% N/A
 N/A
Bank$1,475,228
 12.75% $694,174
 6.00% $766,484
 6.625% $925,566
 8.00%
Tier I capital
(to average assets):
               
Company$1,496,153
 11.49% $520,947
 4.00% N/A
 N/A
 N/A
 N/A
Bank$1,475,228
 11.33% $520,903
 4.00% N/A
 N/A
 $651,129
 5.00%

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Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19.    REVENUE RECOGNITION
18.EARNINGS PER SHARE (“EPS”)
Noninterest revenue streams within the scope of Topic 606 are discussed below.
Service Charges on Deposit Accounts and Wire Transfer Fees
Service charges on noninterest and interest bearing deposit accounts consist of monthly service charges, customer analysis charges, non-sufficient funds (“NSF”) charges, and other deposit account related charges. The Company’s performance obligation for account analysis charges and monthly service charges is generally satisfied, and the related revenue is recognized, over the period in which the service is provided. NSF charges, other deposit account related charges, and wire transfer fees are transaction based, and therefore the Company’s performance obligation is satisfied at the point of the transaction, and related revenue recognized at that point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.
Service charges on deposit accounts and wire transfers are summarized below:
Year Ended December 31,
202320222021
(Dollars in thousands)
Noninterest bearing deposit account income:
Monthly service charges$969 $997 $1,065 
Customer analysis charges5,043 4,602 3,219 
NSF charges2,991 2,889 2,554 
Other service charges365 355 345 
Total noninterest bearing deposit account income9,368 8,843 7,183 
Interest bearing deposit account income:
Monthly service charges98 95 92 
Total service fees on deposit accounts$9,466 $8,938 $7,275 
Wire transfer fee income:
Wire transfer fees$2,749 $3,005 $3,082 
Foreign exchange fees573 472 437 
Total wire transfer fees$3,322 $3,477 $3,519 

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HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
20.    EARNINGS PER SHARE (“EPS”)
Earnings per share are computed by dividing net income by the weighted average number of common shares outstanding for the period. Basic EPS does not reflect the possibility of dilution that could result from the issuance of additional shares of common stock upon exercise or conversion of outstanding securities, and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period.equity awards or convertible notes. Diluted EPS reflects the potential dilution that could occur if stock options, convertible notes, employee stock purchase program (“ESPP”) shares, or other contracts to issue common stock were exercised or converted to common stock that would then share in our earnings. For the years ended December 31, 20172023, 2022 and 2016,2021, stock options and restricted sharesshare awards of approximately 443 thousand866,959, 693,668, and 519 thousand772,707 shares of common stock, respectively, were excluded in computing diluted earnings per common share because they were considered antidilutive. Additionally, warrants to purchase 20,379 and 19,849anti-dilutive.
In 2018, the Company issued $217.5 million in convertible senior notes maturing on May 15, 2038, of which $444 thousand remained outstanding at December 31, 2023. The convertible notes can be converted into the Company’s shares of common stock (relatedat an initial rate of 45.0760 shares per $1,000 principal amount of the notes (See Note 10 “Convertible Notes and Subordinated Debentures” for additional information regarding convertible notes issued). For the years ended December 31, 2023, 2022 and 2021, shares related to the TARP Capital Purchase Plan)convertible notes issued were antidilutivenot included in the Company’s diluted EPS calculation. In accordance with the terms of the convertible notes and excluded forsettlement options available to the Company, no shares would have been delivered to investors of the convertible notes upon assumed conversion based on the Company’s common stock price during the years ended December 31, 2023, 2022 and 2021 as the conversion price exceeded the market price of the Company’s stock.
In July 2021, the Company’s Board of Directors approved a share repurchase program that authorized the Company to repurchase $50.0 million of its common stock. In January 2022, the Company’s Board of Directors approved a share repurchase program that authorizes the Company to repurchase up to an additional $50.0 million of its common stock. During the year ended December 31, 2017 and 2016, respectively.2021, the Company repurchased 3,682,268 shares of common stock totaling $50.0 million. During the year ended December 31, 2022, the Company repurchased 1,038,986 shares of common stock totaling $14.7 million. During the year ended December 31, 2023, the Company did not repurchase any shares of common stock as part of the share repurchase program.
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HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table showspresents the computation of basic and diluted EPS for the years ended December 31, 2017, 2016,2023, 2022, and 2015:2021.
Net Income
(Numerator)		Weighted-Average Shares
(Denominator)		Earnings
Per
Share
(Dollars in thousands, except share and per share data)
2023
Basic EPS - common stock$133,673 119,906,109 $1.11 
Effect of dilutive securities:
Stock options and restricted stock487,148 
Diluted EPS - common stock$133,673 120,393,257 $1.11 
2022
Basic EPS - common stock$218,277 119,824,970 $1.82 
Effect of dilutive securities:
Stock options, restricted stock, and ESPP shares647,375 
Diluted EPS - common stock$218,277 120,472,345 $1.81 
2021
Basic EPS - common stock$204,572 122,321,768 $1.67 
Effect of dilutive securities:
Stock options, restricted stock, and ESPP shares811,257 
Diluted EPS - common stock$204,572 123,133,025 $1.66 
F-66

 
Net income
available to common
stockholders
(Numerator)
 
Weighted Average
Shares
(Denominator)
 
Per
Share
(Amount)
 (Dollars in thousands, except share and per share data)
2017     
Basic EPS - common stock$139,445
 135,348,938
 $1.03
Effect of Dilutive Securities:     
Stock Options and Performance Units  336,031
  
Diluted EPS - common stock$139,445
 135,684,969
 $1.03
      
2016     
Basic EPS - common stock$113,747
 103,289,059
 $1.10
Effect of Dilutive Securities:     
Stock Options and Performance Units  241,259
  
Diluted EPS - common stock$113,747
 103,530,318
 $1.10
      
2015     
Basic EPS - common stock$92,258
 79,549,651
 $1.16
Effect of Dilutive Securities:     
Stock Options and Performance Units  31,905
  
Common stock warrants  30,244
  
Diluted EPS - common stock$92,258
 79,611,800
 $1.16


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Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19.21.    SERVICING ASSETS
Servicing assets are recognized when SBA and residential mortgage loans are sold with servicing retained with the income statement effect recorded in gains on sales of loans. Servicing assets are initially recorded at fair value based on the present value of the contractually specified servicing fee, net of servicing costs, over the estimated life of the loan, using a discount rate. The Company’s servicing costs approximates the industry average servicing costs of 40 basis points. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.
Management periodically evaluates servicing assets for impairment based upon the fair value of the rights as compared to the carrying amount. Impairment is determined by stratifying rights into groupings based on loan type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount.
The changes in net servicing assets for the year ended December 31, 2017 and 2016 were as follows:
 Year Ended December 31,
 2017 2016
 (Dollars in thousands)
Balance at beginning of period$26,457
 $12,000
Additions through originations of servicing assets5,492
 4,472
Additions through acquisition of Wilshire (net of servicing liabilities)—
 15,873
Amortization(7,239) (5,888)
Balance at end of period$24,710
 $26,457
Total servicing assets at December 31, 20172023, totaled $24.7$9.6 million and waswere comprised of $22.2$7.6 million in SBA servicing assets and $2.5$2.1 million in mortgage related servicing assets. At December 31, 2016,2022, servicing assets totaled $26.5$11.6 million, comprised of $24.7$8.9 million in SBA servicing assets and $1.8$2.7 million in mortgage related servicing assets. At December 31, 2023 and 2022, the Company did not have a valuation allowance on its servicing assets.
The changes in servicing assets for the years ended December 31, 2023, 2022 and 2021, were as follows:
Year Ended December 31,
202320222021
(Dollars in thousands)
Balance at beginning of period$11,628 $10,418 $12,692 
Additions through originations of servicing assets1,892 5,200 2,880 
Amortization(3,889)(3,990)(5,154)
Balance at end of period$9,631 $11,628 $10,418 
Loans serviced for others are not reported as assets. The principal balances of loans serviced for other institutions were $987.4 million and $1.10 billion at December 31, 2023 and 2022, respectively.
The Company utilizes the discounted cash flow method to calculate the initial excess servicing assets. The inputs used in determining the fair value of theevaluating servicing assets for impairment at December 31, 20172023 and December 31, 20162022, are presented below.
December 31,
20232022
SBA Servicing Assets:
Weighted-average discount rate11.12%8.76%
Constant prepayment rate12.17%12.09%
Mortgage Servicing Assets:
Weighted-average discount rate11.00%11.38%
Constant prepayment rate9.52%9.61%

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December 31, 2017December 31, 2016
RangeRange
SBA Servicing Assets:
Weighted-average discount rate10.13% ~ 11.13%5.55% ~ 9.85%
Constant prepayment rate7.50% ~ 12.50%7.20% ~ 12.10%
Mortgage Servicing Assets:
Weighted-average discount rate9.50% ~ 9.66%7.00% ~ 7.25%
Constant prepayment rate7.71% ~ 9.13%13.77% ~ 15.88%




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Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

22.    CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY
20.CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY
The following presents the unconsolidated condensed financial statements of financial condition for only the parent company, Hope Bancorp, Inc., as ofat December 31, 20172023 and 2016:2022:
STATEMENTS OF FINANCIAL CONDITION
 December 31,
 20232022
 (Dollars in thousands)
ASSETS:
Cash and cash equivalents$27,217 $62,380 
Other assets11,503 11,689 
Investment in bank subsidiary2,191,747 2,270,280 
Total assets$2,230,467 $2,344,349 
LIABILITIES:
Convertible notes, net$444 $217,148 
Subordinated debentures, net107,825 106,565 
Accounts payable and other liabilities955 1,308 
Total liabilities109,224 325,021 
Stockholders’ equity2,121,243 2,019,328 
Total liabilities and stockholders’ equity$2,230,467 $2,344,349 
 December 31,
 2017 2016
 (Dollars in thousands)
ASSETS:   
Cash and cash equivalents$13,327
 $13,859
Other assets10,763
 11,428
Investment in bank subsidiary2,005,462
 1,930,455
TOTAL ASSETS$2,029,552
 $1,955,742
LIABILITIES:   
Other borrowings$100,853
 $99,808
Accounts payable and other liabilities444
 461
Total liabilities101,297
 100,269
STOCKHOLDERS’ EQUITY1,928,255
 1,855,473
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$2,029,552
 $1,955,742

The following presents the unconsolidated condensed statements of income for only the parent company, Hope Bancorp, for the years ended December 31, 2023, 2022 and 2021:
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 Years Ended December 31,
 2017 2016 2015
 (Dollars in thousands)
Interest income$—
 $—
 $—
Interest expense5,089
 2,927
 1,561
Other operating expense5,988
 9,826
 4,967
Equity in earnings of bank subsidiary146,397
 121,996
 96,318
Income before income tax benefit135,320
 109,243
 89,790
Income tax benefit4,125
 4,504
 2,468
Net income139,445
 113,747
 92,258
Other comprehensive loss, net of tax(3,527) (12,825) (3,537)
Comprehensive income$135,918
 $100,922
 $88,721











 Year Ended December 31,
 202320222021
 (Dollars in thousands)
Interest income$— $— $— 
Interest expense(12,421)(11,330)(9,186)
Noninterest income405 — — 
Noninterest expense(6,808)(7,212)(5,633)
Dividends from subsidiary, net260,500 133,000 128,000 
Equity in undistributed earnings of subsidiary(113,559)98,354 87,025 
Income before income tax benefit128,117 212,812 200,206 
Income tax benefit5,556 5,465 4,366 
Net income133,673 218,277 204,572 
Other comprehensive income (loss), net of tax26,119 (219,445)(44,165)
Comprehensive income (loss)$159,792 $(1,168)$160,407 
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Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following presents the unconsolidated condensed statements of cash flows for only the parent company, Hope Bancorp, for the years ended December 31, 2023, 2022 and 2021:
STATEMENTS OF CASH FLOWS
 Year Ended December 31,
 202320222021
 (Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$133,673 $218,277 $204,572 
Adjustments to reconcile net income to net cash from operating activities:
Amortization and capitalization1,602 2,150 2,115 
Stock-based compensation expense340 502 141 
Net gain on convertible notes repurchased(405)— — 
Change in other assets186 (307)(326)
Change in accounts payable and other liabilities(353)368 25 
Equity in undistributed earnings of bank subsidiary113,559 (98,354)(87,025)
Net cash provided by operating activities248,602 122,636 119,502 
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equity investments— — — 
Net cash provided by investing activities— — — 
CASH FLOWS USED IN FINANCING ACTIVITIES:
Issuance of additional stock pursuant to various stock plans1 531 — 
Repurchase and repayment of convertible notes(216,641)— — 
Purchase of treasury stock— (14,667)(50,000)
Payments of cash dividends(67,125)(67,126)(68,666)
Net cash used in financing activities(283,765)(81,262)(118,666)
NET CHANGE IN CASH AND CASH EQUIVALENTS(35,163)41,374 836 
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR62,380 21,006 20,170 
CASH AND CASH EQUIVALENTS, END OF YEAR$27,217 $62,380 $21,006 
F-69

 Years Ended December 31,
 2017 2016 2015
 (Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net income$139,445
 $113,747
 $92,258
Adjustments to reconcile net income to net cash from
  operating activities:
     
Amortization1,045
 558
 188
Stock-based compensation expense523
 —
 —
Change in other assets665
 2,172
 717
Change in accounts payable and other liabilities(17) (119) (1,053)
Equity in undistributed earnings of bank subsidiary(76,397) (77,996) (62,318)
Net cash from operating activities65,264
 38,362
 29,792
CASH FLOWS FROM INVESTING ACTIVITIES:     
Cash and cash equivalents acquired through the merger—
 13,248
 —
Net cash from investing activities—
 13,248
 —
CASH FLOWS USED IN FINANCING ACTIVITIES:     
Issuance of additional stock pursuant to various stock plans1,865
 —
 —
Redemption of common stock warrant—
 —
 (1,150)
Payments of cash dividends(67,661) (42,493) (33,407)
Net cash used in financing activities(65,796) (42,493) (34,557)
NET CHANGE IN CASH AND CASH EQUIVALENTS(532) 9,117
 (4,765)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR13,859
 4,742
 9,507
CASH AND CASH EQUIVALENTS, END OF YEAR$13,327
 $13,859
 $4,742

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Table of Contents
HOPE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

23.    QUARTERLY FINANCIAL DATA (UNAUDITED)
21.QUARTERLY FINANCIAL DATA (UNAUDITED)    
Summarized unaudited quarterly financial data follows for the three months ended:
2023 Three Months Ended,
March 31June 30September 30December 31
 (Dollars in thousands, except per share data)
Interest income$236,677 $267,184 $275,793 $269,224 
Interest expense102,799 136,495 140,415 143,308 
Net interest income before provision for credit losses133,878 130,689 135,378 125,916 
Provision for credit losses1,700 8,900 16,800 1,700 
Net interest income after provision for credit losses132,178 121,789 118,578 124,216 
Noninterest income10,978 17,014 8,305 9,280 
Noninterest expense90,354 87,333 86,873 99,891 
Income before income tax provision52,802 51,470 40,010 33,605 
Income tax provision13,681 13,448 9,961 7,124 
Net income$39,121 $38,022 $30,049 $26,481 
Basic earnings per common share$0.33 $0.32 $0.25 $0.22 
Diluted earnings per common share$0.33 $0.32 $0.25 $0.22 
2017 Quarter Ended,
March 31 June 30 September 30 December 31
2022 Three Months Ended,2022 Three Months Ended,
March 31March 31June 30September 30December 31
(Dollars in thousands, except per share data) (Dollars in thousands, except per share data)
Interest income$132,743
 $138,533
 $147,643
 $153,185
Interest expense17,838
 21,713
 24,380
 26,793
Net interest income before provision for loan losses114,905
 116,820
 123,263
 126,392
Provision for loan losses5,600
 2,760
 5,400
 3,600
Net interest income after provision for loan losses109,305
 114,060
 117,863

122,792
Net interest income before provision (credit) for credit losses
Provision (credit) for credit losses
Net interest income after provision (credit) for credit losses
Noninterest income17,603
 16,115
 16,246
 16,451
Noninterest expense67,699
 64,037
 61,837
 73,028
Income before income tax provision59,209
 66,138

72,272

66,215
Income tax provision22,999
 25,451
 27,708
 48,231
Net income$36,210
 $40,687

$44,564

$17,984
       
Basic earnings per common share$0.27
 $0.30
 $0.33
 $0.13
Basic earnings per common share
Basic earnings per common share
Diluted earnings per common share$0.27
 $0.30
 $0.33
 $0.13
F-70

 2016 Quarter Ended,
 March 31 June 30 September 30 December 31
 (Dollars in thousands, except per share data)
Interest income$83,461
 $83,534
 $119,552
 $135,387
Interest expense11,853
 12,470
 16,078
 18,178
Net interest income before provision for loan losses71,608
 71,064
 103,474
 117,209
Provision for loan losses500
 1,200
 6,500
 800
Net interest income after provision for loan losses71,108
 69,864
 96,974
 116,409
Noninterest income8,774
 10,707
 14,146
 18,192
Noninterest expense40,050
 40,348
 67,846
 66,731
Income before income tax provision39,832
 40,223
 43,274
 67,870
Income tax provision16,210
 16,833
 17,169
 27,240
Net income$23,622
 $23,390
 $26,105
 $40,630
 

 

 

 

Basic earnings per common share$0.30
 $0.29
 $0.22
 $0.30
Diluted earnings per common share$0.30
 $0.29
 $0.22
 $0.30



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