HOPE — Hope Bancorp, Inc.

Summary of Hope Bancorp Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Net Income: $31 million, a 28% increase year-over-year from $24 million and a recovery from a net loss of $28 million in Q2 2025.
• Adjusted Net Income: $32 million, up 29% from $24.5 million in Q2 2025.
• Net Interest Income: $127 million, up 8% quarter-over-quarter and 21% year-over-year.
• Net Interest Margin: Expanded by 20 basis points to 2.89%.
• Loan Growth: Gross loans totaled $14.6 billion, a 1.2% increase quarter-over-quarter (5% annualized).
• Deposits: Totaled $15.8 billion, a slight decrease of 1% from Q2 2025, primarily due to a reduction in broker deposits.
• Asset Quality: Net charge-offs fell 57% to $5 million, and criticized loans decreased by 10% to $373 million.

2. Strategic Updates and Business Highlights

• Continued investments in talent have supported loan growth across major segments: Commercial & Industrial (C&I), commercial real estate, and residential mortgages.
• The bank is focused on strengthening its deposit franchise and optimizing deposit costs.
• The acquisition of Territorial Bancorp has enhanced deposit positions, with ongoing efforts to stabilize and expand operations.
• The efficiency ratio improved to 67.5%, reflecting positive operating leverage as revenue growth outpaced expense growth.

3. Forward Guidance and Outlook

• Loan Growth: Expected to achieve high single-digit growth for the full year 2025.
• Net Interest Income: Projected growth of approximately 10% for 2025.
• Noninterest Income: Anticipated growth of around 30%, excluding notable items from Q2.
• Noninterest Expenses: Expected to rise about 15%, reflecting the integration of Territorial's operations and ongoing talent investments.
• Anticipated effective tax rate for Q4 2025 is approximately 14%, excluding notable items.

4. Bad News, Challenges, or Points of Concern

• Deposit Decrease: A 1% decline in total deposits, primarily due to reduced broker deposits.
• Government Shutdown Impact: The SBA loan sale business is affected by the government shutdown, halting new applications and secondary market sales, although existing approved loans remain unaffected.
• Nonaccrual Loans: An increase in nonaccrual loans in the commercial real estate sector, though overall nonperforming loans have remained flat.

5. Notable Q&A Insights

• Deposit Rates: Spot rate on total deposits was 2.82% at the end of September, with an average margin of 2.96% for the month.
• Territorial Acquisition: Ongoing efforts to stabilize operations post-acquisition, with incremental cost savings being realized.
• CD Maturities: $2.3 billion of CDs maturing in Q4 at an average rate of 4.08%.
• Loan Pipeline: A strong loan pipeline is expected to support growth in Q4, despite potential seasonal slowdowns.
• Competitive Environment: The bank is in a better position to manage deposit costs due to a lower loan-to-deposit ratio and reduced reliance on broker deposits compared to previous periods.

Overall, Hope Bancorp demonstrated strong financial recovery in Q3 2025 with improved profitability and asset quality, while also facing challenges related to deposit levels and external market conditions. The outlook remains positive with strategic growth initiatives in place.