Observations and Sample of Recent Trades: AROW, EPRPRC, HOPE, HT, WELL

Economy: 

Exclusive: U.S. sorghum armada U-turns at sea after China tariffs: Reuters (4 of the 5 top sorghum exporters are in states carried by Trump: Kansas, Oklahoma, South Dakota and Texas). One endangered Democrat Senator, Heidi Heitkamp, is from South Dakota and is facing a serious challenge from South Dakota's republican congressman Kevin Cramer who is a close Trump ally. Trump beat Clinton by 36% in SD. Trump's looming trade war gives Democrats an opening in farm country: Reuters 

As previously discussed in a comment, China concluded that the U.S. was dumping sorghum into China and has required importers to put down a 178.6% deposit in anticipation of China levying tariffs on U.S. sorghum imports. This action was taken the day after the U.S. prohibited U.S. firms from selling parts to ZTE for seven years. 

Philly Fed manufacturing index points to continued growth in April - MarketWatch 

Pricey U.S. home sales soar as buyers ignore new tax code: Reuters (I would not expect this trend to last. There may be some buying now in anticipation that mortgage rates will rise.)

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Portfolio Management: 

The stock market has lost its upside momentum and is churning significantly below its January 2018 highs. 

Interest rates and inflation expectations are moving up and are providing a headwind for stocks. 

I am continuing to buy mostly short term bonds and CDs with the redemption proceeds of maturing ones. Yields on comparable newly issued CDs are significantly higher, but remain below what I would consider market based rates. Banks remain reluctant to increase their deposit costs as the yield curve continues to squeeze their net interest margins. 

Short term treasuries generally have slightly higher yields than similar maturity CDs. I have increased slightly my weighting in short term treasuries and investment grade corporate bonds that provide yield advantages to CDs.   

Intermediate term bonds are falling in price and rising in yield. I doubt whether any of the intermediate term bonds bought this year are in profit territory which is fine with me.  I am just nibbling and basically gradually moving up to my weighting before I slashed my allocation last year. 

I am financially able to hold all bonds to maturity. The unrealized losses will disappear over time. I suspect that there may even be a powerful bond rally later this year based on events that cause a massive flight to this asset category (e.g. more negative developments on trade; a slowdown in consumer spending; a total break down in the NK negotiations; the onset of a bear market in stocks). 

Equity REITs are by and large in a bear market that shows no signs yet of reversing. Rallies are sold and quickly snuffed out. 

Last Friday Closing Prices (normal correlations): 

VNQ $74.06 -$0.68 -$0.91%: Vanguard REIT Index ETF 

IEF $101.57 -$0.34 -0.33%: iShares 7-10 Year Treasury Bond ETF 

TLT $118.46 -$0.86 -0.72%: iShares 20+ Year Treasury Bond ETF 

XLU $50.30 -$0.46 -0.91%: SPDR Select Utilities ETF 

KRE $61.19 +$0.53 +0.87%: SPDR S&P Regional Banking ETF 

By "normal", I am referring to a more often than anticipated correlation when the move in IEF is greater than .25%. 

My approach in this sector will be to continue buying small lots and averaging down only. I will on occasion harvest a profit or two as I recently did with HT discussed below. 

Once a small ball purchase is sold, it will be removed from this list and any new purchase will to be a less than 5% below the sales price.  

Any subsequent purchase of the stocks listed above can only be made a price lower than the price shown.    

Overall, my goal now is to gradually increase the weighted average yield of my entire portfolio. That has been easy to do with the rise in short and intermediate interest rates and the decline in bond like common stocks. 

I am confident now that my interest income will more than double this year compared to 2017 and may come close to tripling.   

2018 could end up being a negative total return year for both the S & P 500 and bonds, though bonds are more likely IMO to be negative for the year than stocks.  Fixed income yields are so low that it does not take much of a value decline to wipe out the yield and then some in a total return calculation. 

Year To Date Total Returns Through 4/20/18: 

iShares 7-10 Year Treasury Bond ETF (IEF) Total Return = -3.32%
iShares 20+ Year Treasury Bond ETF (TLT) Total Return = -6.04%
iShares  Investment Grade Corporate Bond ETF (LQD)     = -4.01%
iShares TIPS Bond ETF (TIP) Total Return                           = -1.22%
S&P 500 ETF (SPY) Total Return                                            = + .31%


Bonds will move in lock step with directional moves in interest rates which is not the case for stocks whose values depend on far more variables than interest rates. A vintage bond would have to decline in price until it reach an equilibrium in yield with current rates.   

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Markets and Market Commentary: 

Treasury 10-Year Yield Sets 2018 High, Traders Focus on 3% - Bloomberg

Bond Traders Refocus on 3% U.S. Yield as Inflation Bets Mount - Bloomberg

Mortgage rates roar to a fresh 2018 high - MarketWatch

U.S. Weighs Emergency Powers to Curb China Tech Investments - Bloomberg

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Trump: 

Comey Memos Show Trump Sought Loyalty, Tried to End Flynn Probe - Bloomberg

Comey memos renew questions over Trump's behavior - CNN 

Trump's Response: 

The Comey memos bolster his claim that he didn’t leak classified information - The Washington Post  

Manafort Suspected of Serving as ‘Back Channel’ to Russia, DOJ Says - Bloomberg

Trump lied to me about his wealth to get onto the Forbes 400. Here are the tapes. - The Washington Post; A new allegation says Trump lied about his wealth. Here's what we do know-CNN What would be news worthy of nationwide headlines is when Trump told the truth about anything.  

Donald Trump falsely says James Comey memos disprove collusion, obstruction | PolitiFact (claim given yet another "pants on fire" rating)
Donald's approval rating among those who call themselves evangelicals is growing and is currently at 75% and at 81% among white evangelical males. PRRI About 80% of republicans continue to view Trump as honest. A similar number believe Trump's assertions about the Fake News Media making up stories about him.  

The GOP's efforts, starting with the Nixon-Agnew administration, to undermine the free press has been successful and is probably irreversible among those already infected by those efforts.  

Trump lashes out at New York Times reporter in latest attack on press - CBS News:

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A young man, Travis Reinking, armed with an AR-15, shot and killed 4 persons at a Nashville Waffle House Saturday morning. 4 dead, 4 wounded in shooting at Waffle House in Tennessee, say Nashville police - CBS News  Last year, this guy was arrested inside a White House security barrier claiming that he had an appointment with Donald. He also thought Taylor Swift was stalking him. Travis Reinking: What we know about the Waffle House shooting suspect - CNN Authorities confiscated his weapons, apparently owned by his father, and gave them back to his dad. Authorities claim his dad gave the guns back to Reinking. The father will consequently face civil liability. 

Scott Pruitt is the target of no less than 10 federal investigations – VICE News (Yes, of course, Trump is going to drain the swamp because he repeatedly said he would do so as his True Believers cheered his classic and easily recognizable demagoguery)   

Scott Pruitt Before the E.P.A.: Fancy Homes, a Shell Company and Friends With Money - The New York Times; 
NYT: Pruitt purchased home from lobbyist in 2003, using a shell company - CNN; 

‘A factory of bad ideas’: How Scott Pruitt undermined his mission at EPA - The Washington Post

Another family values republican is having problems including criminal charges relating to an extra-marital affair. Missouri's Republican governor charged with felony computer data tampering; Missouri Gov. Eric Greitens Indicted On A Charge Of Felony Invasion Of Privacy-NPR 

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1. Bought 50 EPRPRC at $24 and 50 at $23.78-Used Commission Free Trades (two different accounts):

This is a convertible preferred stock issued by the REIT EPR Properties. 

Last Friday, the common shares closed at $53.35 which produced a 8.1% dividend yield. 

Quote: EPR Properties 5.75% Cumulative. Convertibel Preferred Series C 

Prospectus 

Par Value: $25

Coupon: 5.75%

Dividends: Quarterly

Yield at TC of $23.89: 6.02%
Last Ex Dividend Date: 3/28/18

Conversion Price: Subject to Adjustments 

Starting Conversion Terms: 

"You, at your option, may convert some or all of your outstanding Series C Preferred Shares initially at a conversion rate of 0.3504 common shares per $25.00 liquidation preference, or the Conversion Rate, which is equivalent to an initial conversion price of approximately $71.34 per common share (subject to adjustment in certain events). Except as otherwise provided, our Series C Preferred Shares will only be convertible into our common shares. See “Description of the Series C Preferred Shares — Conversion Rights.”"

Optional Conversion by Issuer-Not likely anytime soon based on EPR's current stock price:

"On or after January 15, 2012, we may, at our option, convert some or all of the Series C Preferred Shares into that number of common shares that are issuable at the then applicable Conversion Rate, which we refer to as the Company Conversion Option. We may exercise the Company Conversion Option only if the Closing Sale Price of our common shares equals or exceeds 135% of then applicable conversion price of the Series C Preferred Shares for at least 20 Trading Days in a period of 30 consecutive Trading Days (including the last Trading Day of such period) ending on the Trading Day immediately prior to our issuance of a press release announcing our exercise of the Company Conversion Option and our method of payment as described above under “Conversion Settlement”. See “Description of the Series C Preferred Shares — Company Conversion Option.” (emphasis added)

EPR Properties Interactive Chart (bear trend)

Convertible securities cause the Old Geezer's head to hurt. 

Subsequent Downward Adjustments to Conversion Price: 

As far as I can tell, the only current downward adjustment to the original effective $71.34 per share conversion rate is the following: 

I only know for sure that EPR is now paying a quarterly common share dividend in excess of $.6875 per share which will cause a downward adjustment in the conversion price. The current dividend is paid monthly at $.36 per share or $1.44 per share on a quarterly basis. EPR Properties Declares Monthly Dividend for Common Shareholders and Quarterly Dividends for Preferred Shareholders 

In case you are wondering, I did not do the math to determine what the conversion rate is now. 

I did find this document at EPR's website that claims that the conversion price is at $64.35 as of 3/31/2018, so I will go with that calculation. Series C Preferred Stocks.PDF

I can tell you that EPRPRC was trading near $30 when the common shares were trading over $70.   

Using the 6/26/17 closing prices, EPR closed at $75.39 and EPRPRC closed at  $29.7. The premium price was due to the conversion right when the common shares were trading over $75.   

EPR Stock Chart 

EPR.PC Stock Chart 

The common currently provides a 2% higher yield than this convertible preferred stock. The common will be more volatile. The preferred dividend can not be cut or eliminated but only deferred after EPR eliminates the common share cash dividend:

The convertible preferred shares, unlike traditional fixed coupon equity preferred stocks, has the potential to participate in the common stock's appreciation. 

I have bought and sold both EPR and EPRPRC. 

Last EPRPRC Trade:

2016 Roth IRA 50 Shares +$160.48

ITEM # 3: Sold 50 EPRPRC-Update For Equity REIT Basket Strategy As Of 4/6/16 - South Gent | Seeking Alpha

Closing Prices Last Friday: EPR-PC $23.80 -$0.20 -0.83%; EPR $53.34 -$1.00 -1.84% 

2. Small Ball- Equity REIT Common and Preferred Stock Basket Strategy:

A. Started "Buying Program" Welltower: Bought 10 at $52 and 2 at $51.15-Used Commission Free Trades:

Quote: Welltower Inc. (WELL)

About: Welltower owns triple net, seniors housing operating and outpatient medical facility properties. 

The triple net leased properties "include independent living facilities and independent supportive living facilities (Canada), continuing care retirement communities, assisted living facilities, care homes with and without nursing (U.K.), Alzheimer’s/dementia care facilities and long-term/post-acute care facilities." 

The seniors housing operating properties include "independent living facilities and independent supportive living facilities, assisted living facilities, care homes and Alzheimer’s/dementia care facilities.  Properties are primarily held in joint venture entities with operating partners. We utilize the structure proposed in the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the Internal Revenue Code authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008)." 

Before investing in WELL, the investor needs to understand the difference between the RIDEA structure and the typical structure where the REIT leases the property to operators. That is beyond the scope of this brief summary. {See, e.g. Why a Senior Housing 'Rough Patch' Will Not Derail RIDEA - Senior Housing News; 2 Structures, 2 Picks in Health-Care REITs; Asset Sales Mask the Solid Performance of Welltower Inc's Senior Housing Portfolio -- The Motley Fool;Welltower Bullish on Senior Housing JVs After Stellar Results - Senior Housing News }

The outpatient medical building portfolio "consists of health care related buildings that generally include physician offices, ambulatory surgery centers, diagnostic facilities, outpatient services and/or labs. Our portfolio has a strong affiliation with health systems. Approximately 95% of our outpatient medical building portfolio is affiliated with health systems (with buildings on hospital campuses or serving as satellite locations for the health system and its physicians). We typically lease our outpatient medical buildings to multiple tenants and provide varying levels of property management.  Our outpatient medical segment accounted for 13% of total revenues for each of the years ended December 31, 2017, 2016 and 2015.  No single tenant exceeds 20% of segment revenues."

Page 24 Annual Report

2017 Annual Report 

Welltower Announces Stock Ticker Change to "WELL" from HCN

I have never owned WELL's common stock before this purchase. I did own 300 shares in a Canadian REIT that was acquired by HCN: Item # 6 SOLD: 300 HLP-UN:CA at C$14.17 (profit snapshot = US$1,039.15)

Welltower Inc. Interactive Chart: Major BEAR TREND

52 Week High at Time of Purchase: $78.17
52 Week Low: $51.82
Decline = 33.71%

6/26/17 Closing Price: $77.66
4/13/18 Closing Price: $52.63
Decline: 32.23%

While some view the share price decline as indicating a risky stock, I view the decline as a de-risking move. The price was too high and now it is at least a rational one within a zone of reasonableness based on what is known or knowable at the moment. 

Dividend: Quarterly at $.87 per share ($3.48 annually)

Dividend History – Welltower

Dividend Yield at $52:  6.69% (10 share purchase)
Dividend Yield at $51.15: 6.8% (2 share purchase)
Melded at $51.86 = 6.71% (12 shares)

Last Earnings Report at Time of Purchase (Q/E 12/31/17):

2018 Outlook:

"We are introducing our 2018 earnings guidance and expect to report net income attributable to common stockholders in a range of $2.38 to $2.48 per diluted share and normalized FFO attributable to common stockholders in a range of $3.95 to $4.05 per diluted share.  As previously disclosed, we no longer report FAD because it could be considered a liquidity metric".  

IMO, the reason given for refusing to provide funds available for distribution is bogus; and that refusal is consequently a negative item for me. 

Problem with Genesis Healthcare:

The most serious recent problem was with WELL's tenant Genesis Healthcare (GEN) which is discussed in the previous linked earnings report. As adjusted for the restructuring described therein, "Welltower's Genesis concentration will decrease from 6.8% to 5.2% and long-term/post-post acute exposure will decrease from 12.6% to 11.0%. Private pay revenue mix will increase from 94.2% to 94.7%. Additionally, post Genesis's wider restructuring, coverage after management fee will increase to 1.34x and coverage before management fee will increase to 1.73x on an as-adjusted basis."   

I discuss buying 1 WELL SU bond in Item # 3.A. below.  

Closing Price Last Friday: WELL $51.20 -$0.72 -1.39% 

B. Sold 50 HT at $19.02-A Roth IRA Account: 

History This Account: 

Profit Snapshot $68.53

Item # 4.A. Bought 50 HT at $17.37 (3/1/2018 Post)(I discuss the last earnings report in that post)

Quote: Hersha Hospitality Trust Cl A  (HT)

I may use the proceeds to buy HTPRD when and if the price falls below $22.5. My last purchase of that equity preferred stock was at $22.98: Item # 3.A. (3/1/2018 Post); Hersha Hospitality Trust 6.5% Cumulative Preferred Series D Stock

The HT dividend yield at a $19.02 total cost per share is 5.89%. I am not expecting a dividend increase this year. The last HT dividend increase was in 2014: Hersha Hospitality Trust - Dividends  There was a 1 for 4 reverse stock split on 6/23/15. The dividend table is adjusted for that reverse split. The quarterly dividend was slashed from $.72 to $.2 in 2009. The preferred stock dividend can not be cut, only deferred, provided a common share cash dividend is eliminated first.  Before the 1 for 4 reverse split, HT actually cut its quarterly rate from $.18 to $.05 per share:

Page 6: 10k

C. Sold 10 HT at $19.11-Used Commission Free Trade:

Profit Snapshot: +$22.79

I started a "10 share buying program" in HT using commission free trades: Item 4.B. Bought 10 HT at $16.83 (3/1/2018 Post)

Why bother? I do not have even a good bad answer. I am just not interested in this REIT at over $19. I did receive one quarterly dividend payment. 

HT Trading Profits to Date =  $322.21


3. Intermediate Term Bond/CD Ladder Basket Strategy:

A. Bought 1 Welltower 4% SU Bond Maturing on 6/1/25:

Welltower was known as Health Care REIT when this bond was issued: About Health Care REIT™ – Welltower 

FINRA Page: Bond Detail (prospectus linked)

Issuer: Welltower Inc (WELL)

Welltower Reports Fourth Quarter 2017 Results

Welltower Completes $550 Million Senior Unsecured Note Offering ("offering of $550 million in aggregate principal amount of 4.250% senior unsecured notes due April 15, 2028. The notes were priced at 99.959% of their face amount to yield 4.255%.")

Credit Ratings: 

Bought at a Total Cost of 99.462
YTM at TC Then at 4.087%
Current Yield at TC = 4.0216%

B. Bought 1 Entergy Louisiana 3.3% First Mortgage Bond Maturing on 12/1/22: 

Finra Page: Bond Detail (prospectus linked)

This is a first lien bond on substantially all of Entergy Louisiana's assets. 

Issuer: Entergy Louisiana, a wholly owned subsidiary of Entergy Corp. (ETR)


Entergy 2017 Annual Report (Entergy Louisiana results are discussed starting at page 326): 

Credit Ratings: 

Bought at a Total Cost of 99.763 (with $1 Fidelity Commission)
YTM at TC Then at 3.353%
Current Yield at TC = 3.3078%

C. Bought 2 Norfolk Southern 3% SU Bonds Maturing on 4/1/22-A Roth IRA Account: 

FINRA Page: Bond Detail (prospectus linked)

Issuer: Norfolk Southern Corp (NSC)
NSC Analyst Estimates

Norfolk Southern reports fourth-quarter and full-year 2017 results
2017 Annual Report

Recent Bond Issuances:

Prospectus for $500M in 4.15% SU Bonds Maturing in 2048 (February 2018)
Prospectus for $300M in 3.15% SU Bonds Maturing in 2027 (May 2017)
Final Prospectus Supplement for 2.9% SU Bonds Maturing in 2026 (June 2016)

Credit Ratings:

Bought at a Total Cost of  99.77 (with $4 Vanguard Commission)
YTM at Total Cost Then at 3.062%
Current Yield at TC = 3.0069%

4. Short Term Bond/CD Ladder Basket Strategy: 

A. Bought 2 Cadence Bank 1.6% CDs Maturing on 6/18/18 (2 month CDs): 

Issuer: Operating Bank for Cadence Bancorp (CADE) 
CADE Analyst Estimates 
Cadence Bancorporation Reports Fourth Quarter 2017 Results and Initiates a Quarterly Dividend 

B. Bought 1 Treasury 1% Coupon Maturing on 3/15/19: 
YTM at 2.157%

C. Thermo Fischer 2.4% SU Bond Maturing on 2/1/19: 

I bought this bond on 4/3/18 at a total cost of 99.843. :Item # 4.A. I received a notice last Friday that the issuer will redeem this bond early on 5/4/18: 

This optional redemption is subject to a make whole. 

It looks like several companies want to refinance now rather than to wait until bonds mature early next year. This bond has a principal amount outstanding of $900M: Bond Detail I do not see any recent TMO bond offerings yet, however. SEC Filings

Today, I lost 9 BUD bonds maturing on 2/1/19 to an early redemption. 

The make whole calculation did not result in a premium to the $1,000 par values. There are two primary factors for that result: (1) the short period remaining to maturity and (2) the increase in the discount rate due to a rise in short term interest rates. 

As the discount rate increases, the make whole number goes down and vice versa. 

The discount rate is the yield on a treasury maturing at about the same time plus a few basis points. The discount rate is applied to the sum of the remaining interest payments and the principal amount. 


5. REGIONAL BANK BASKET STRATEGY:

A. Sold 100+ AROW at $34.7:

QUOTE: Arrow Financial Corp. (AROW)

Profit Snapshot: +$62.04

Item # 1.A. Added 100 Arrow Financial at $33.95 (1/15/18 Post)

I decided to trade this lot and try later for a lower re-entry price, probably in the $31.5 to $32.5 range.

Arrow Financial Corp. Interactive Chart

I still own a lower cost lot in my IB account. My average cost per share in that account is $24.76. That lot was bought at $26.25: Item # 3 Update For Regional Bank Basket Strategy As Of 3/17/16 - South Gent | Seeking Alpha After my purchase, the company has paid two 3% stock dividends that reduced by average cost per share.

Arrow Financial Corporation Declares Stock Dividend (August 2017)
Arrow Financial Corporation Declares Stock Dividend (August 2016)

Regional Bank Basket Net Realized Gain: $42,097.38  (start date April 2009)

Closing Price Last Friday: AROW $34.75 -$0.25 -0.71% 

B.  Started "10 Share Buying Program for HOPE-Bought 10 at $17.3-Used Commission Free Trade: 

Consensus E.P.S. Estimates (Day of Purchase)
2018: $1.55
2019: $1.64
P/E at $17.3 Price and $1.64 E.P.S. Estimate= 10.55
Estimated E.P.S. Growth Rate: 5.8% 

HOPE Analyst Estimates

HOPE will receive an earnings boost this year from the federal corporate tax reduction to 21%. That is a one time boost in Y-O-Y E.P.S. comparisons. E.P.S. growth in 2019 will depend on operations. 

Investors had a negative reaction to HOPE's 1st quarter report, which was released after the market closed on Tuesday (4/17):

Closing Price Wednesday 4/18/18:  HOPE $17.32 -$0.77 -4.26% 

My last purchase was in my Schwab account at $18.04. Item # 2.A. Bought 50 HOPE at $18.04-Used Commission Free Trade (1/11/18 Post) 

Prior Round-Trip: Item 1.A. Sold  50 HOPE at $19 (11/4/17 Post)-Item 1.B. Bough 50 HOPE at $15.6 (9/14/17 Post)

Dividend: Quarterly at $.13 ($.52 annually)

Dividend Yield at $17.3 TC = 3%

Last Earnings Report: Q/E  3/31/18

Hope Bancorp Reports Record Net Income of $51.2 Million and EPS of $0.38 for 2018 First Quarter 

I was not disappointed with this report, though it did contain some potentially worrisome items relating to increases in NPLs and a modest downtick in net interest margin excluding accretion income. The bank is not seeing a net benefit yet flowing from higher rates given the rise in deposit costs. That issue is probably the main cause of the 4.26% price decline on 4/18/18. 

I was disappointed that the Board elected to continue the $.13 quarterly dividend rate given that the bank is a major beneficiary of the corporate tax reduction. The last quarterly dividend raise was 1 cent per share effective for the  

The failure to raise the dividend by even a penny per share sends the wrong signal to investors, suggesting that the Board and management are concerned about something that is not readily apparent to its shareholders. 

E.P.S. $.38 up from .27% in the 2017 first quarter
Net interest margin 3.66%
NIM Without Accounting Accretion(temporary NIM bump): 3.39%

Nonperforming assets/total assets .97% Nonperforming loans/loans receivable 1.15% Allowance for loan losses/nonperforming loans 66.69% Nonaccrual loans/loans receivable .6% Allowance for loan losses/nonaccrual loans 129.86%

0.97

%

Net charge offs/average loans receivable (annualized) .02%
Return on assets (“ROA”) 1.44%
Return on equity (“ROE”) 10.61%
Return on average tangible equity 14.13%
Efficiency ratio 48.92%
Total risk-based capital ratio 13.86% 
Tangible common equity to tangible assets 10.44%
Tangible Book Value Per Share = $10.81
Book Value Per Share = $14.35

"The Company defines nonperforming loans to include delinquent loans past due 90 days or more on nonaccrual status, delinquent loans past due 90 days or more on accrual status (excluding purchased credit-impaired loans) and accruing restructured loans.  Nonaccrual loans at March 31, 2018 increased to $68.2 million, or 0.60% of loans receivable, from $46.8 million, or 0.42% of loans receivable, at December 31, 2017 and $37.0 million, or 0.35% of loans receivable at March 31, 2017. Accruing restructured loans amounted to $59.6 million at March 31, 2018, compared with $67.3 million at December 31, 2017 and $49.0 million at March 31, 2017. Total nonperforming loans at March 31, 2018 increased to $129.6 million, or 1.15% of loans receivable, from $114.4 million, or 1.03% of loans receivable December 31, 2017 and $86.3 million, or 0.82% of loans receivable at March 31, 2017."

The increase in non-performing and nonaccrual  loans is a negative at this point in the credit cycle. I do not view that increase as troubling yet. The net charge off ratio at .02% was excellent and below the .52% average level: Chart: Charge-Off Rate on All Loans, All Commercial Banks-St. Louis Fed 

Hope Bancorp's (HOPE) CEO Kevin Kim on Q1 2018 Results - Earnings Call Transcript | Seeking Alpha("Excluding purchase accounting adjustment, our net interest margin declined 6 basis points to 3.39%... With our increase in interest rates by the Feb and late March, we would expect that our loan yield will increase in the next quarter as our variable rate loans are re-priced. However, much of this increase is expected to be offset by an increase in our cost of deposits. ..  During the first quarter, we saw a number of previously identified problem loans migrating to non-accrual status while charge-offs and new inflow into problem loans remained very low. Our non-accrual loans increased $21.4 million.")  

The company is expecting an effective tax rate of 25% this year, which includes state income taxes net of the federal deduction. 

Effective Tax Rates:

Page F-54 2017 Annual Report (the 2017 4th quarter  revaluation of a  deferred tax asset added a one time 9.36% increase to the effective rate for that year)

Closing Price Last Friday: HOPE $17.560 +$.14  +0.804% 

Disclaimer: I am not a financial advisor but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sell of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals and situational risks. I can only make that kind of assessment for myself and family members.