Hope Bancorp in Los Angeles announced a cost-cutting plan that includes an undisclosed number of layoffs.
The $20.1 billion-asset company said in a press release that the goal is to reduce annual expenses by $40 million with about 85% coming from layoffs. The plan includes reduced staffing, branch closures, the wind-down of noncore businesses and “operational process improvements.”
Hope said it expects to incur $12 million in one-time charges during the fourth quarter tied to the program.
“Today’s strategic reorganization further evolves our business model,” Kevin Kim, Hope’s chairman, president and CEO, said in the release. “We expect to operate our bank more efficiently, strengthen our franchise, enhance the customer experience and expand our customer relationships.”
Hope will reorganize into four verticals: retail banking, commercial banking, corporate and institutional banking and a fee-based business group.
Timothy Coffey, an analyst at Janney Montgomery Scott, wrote in a client note that Hope could exit or sell its wealth management, consumer credit cards or mortgage warehouse lending businesses. “All of those business lines have been in decline recently,” he said.
Separately, the company charged off $31 million in the third quarter, including $23.4 million tied to a borrower who entered into Chapter 7 liquidation in August. The loan-loss provision nearly doubled that of a quarter earlier, at $16.8 million.
Overall profit fell by 21% from the second quarter, to $30 million.