Hope Bancorp Inc. and Great Western Bancorp Inc. are among the large banks with the greatest exposure to the hotel industry, while Bank7 Corp. has the highest percentage of hotel loans among smaller banks reporting exposure.

Los Angeles-based Hope's $1.7 billion in outstanding commercial real estate hotel and motel loans account for 13.6% of its total gross loans, while Sioux Falls, S.D.-based Great Western's $1.1 billion in outstanding hotel loans equate to 11.8% of gross loans. Among hotels with at least $500 million in outstanding lodging exposure, the newly reported first-quarter figures put the banks well ahead of other hotel-exposure leaders such as Western Alliance Bancorp. and Home BancShares Inc.

Oklahoma City-based Bank7's $176 million of outstanding hospitality loans account for 22.3% of the bank's gross loans.

U.S. hotels have suffered broadly in the coronavirus pandemic, posting unprecedented year-over-year performance declines throughout April. In the week ended May 2, revenue per available room fell 76.8% and occupancy fell 58.5% year over year, according to data provider STR.

STR said demand increased sequentially during the period for the third straight week, suggesting that early April could have represented a performance bottom. On earnings conference calls, executives at hotel brand companies Hilton Worldwide Holdings Inc., Hyatt Hotels Corp. and Marriott International Inc. said hotels in "drive-to" destinations would likely recover first. Hilton President and CEO Christopher Nassetta said the second quarter is likely to be the weakest period for hotel metrics.

Executives said corporate group bookings would be slowest to recover from COVID-19, leading to continued weakness at large properties in urban areas that depend more heavily on events, food service and conference travel.

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Among the largest banks, Wells Fargo & Co. had the highest volume of reported lodging exposure as of the first quarter, with $12.1 billion of outstanding commercial real estate hotel and motel loans representing 1.2% of total gross loans. Other large banks, such as JPMorgan Chase & Co. and Bank of America Corp., are lenders in large hotel owners' and operators' credit facilities, in a form of hotel exposure not included in S&P Global Market Intelligence data.

On an earnings conference call, Hope Bancorp Chairman, President and CEO Kevin Sung Kim said the bank tightened its hotel underwriting criteria in 2019, adding that current debt service coverage ratios and loan-to-value ratios for hotel, motel and retail properties "are well above even the tightened underwriting criteria at the time these loans were originated." Executives at Great Western described the bank's hotel book as a seasoned portfolio with longstanding customer relationships. Of the banks' seven hotel-related loans over $25 million, "there's only one that's adversely risk rated today," COO Douglas Bass said on an April 30 earnings call.

At Bank7, loans accounting for roughly 30% of outstanding balances had been modified as of April 28, with two-thirds of that total in the hospitality segment, executives said. Of the 43 properties in the bank's hotel portfolio, 34 are classified as operational, with the rest under construction. At the operational properties, occupancy has been improving, standing above 30% in two-thirds of hotels and above 50% in 10 properties.

While it will likely take two to three years for the hotel industry to recover fully, Bank7's hotel operators need roughly 50% occupancy to amortize their debt and will reach that level much sooner, Chief Credit Officer Jason Estes said.