HOPE — Hope Bancorp, Inc.

Summary of Hope Bancorp Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Net Income: $30 million, up 40% year-over-year (from $21 million), but down from $34 million quarter-over-quarter due to higher provisions for credit losses and taxes.
• Pre-Provision Net Revenue: $47 million, a 43% increase year-over-year and a slight increase of 1% from the previous quarter.
• Net Interest Income: $124 million, up 23% year-over-year but down 3% quarter-over-quarter.
• Net Interest Margin: Stable at 2.90%, with a year-over-year improvement of 36 basis points.
• Loans: Gross loans at $14.74 billion, a 10% increase year-over-year but stable quarter-over-quarter.
• Deposits: $15.73 billion, a 9% increase year-over-year and a 1% increase quarter-over-quarter.
• Criticized Loans: Decreased by 7% quarter-over-quarter to $325 million, showing improvement in asset quality.

2. Strategic Updates and Business Highlights:

• Announced the acquisition of the Commercial Banking unit of SMBC MANUBANK, expected to close in the second half of 2026, which will enhance commercial banking capabilities and expand market reach.
• The acquisition is projected to add approximately $2.5 billion in loans and $2.7 billion in deposits, contributing to lower overall costs of deposits and expected earnings accretion in 2027.
• Continued capital return strategy with a $7 million share repurchase and a quarterly dividend of $0.14 per share.

3. Forward Guidance and Outlook:

• Anticipating over 20% loan growth for 2026, driven by the MANUBANK acquisition and organic growth, with a moderate pullback in commercial real estate (CRE) loans to manage concentration risks.
• Expecting total revenue growth at the higher end of the 15% to 20% range for 2026.
• Pre-provision net revenue growth projected at 25% to 30%, excluding notable items.
• Full-year effective tax rate expected between 20% and 25%.

4. Bad News, Challenges, or Points of Concern:

• Quarter-over-quarter decline in net income due to increased provisions for credit losses and higher tax rates.
• Net charge-offs increased to $11 million, raising concerns about asset quality despite improvements in nonperforming loans and criticized assets.
• Potential risks associated with the pending acquisition, including integration challenges and regulatory approvals.

5. Notable Q&A Insights:

• Management indicated that share repurchase activity will be opportunistic, depending on capital generation and growth opportunities.
• The purchase accounting benefit from the Territorial transaction remains steady at approximately $4 million per quarter.
• There is an expectation of a slight increase in expenses as production and revenue strengthen throughout the year.
• The outlook for deposit costs remains favorable, with anticipated reductions in interest-bearing deposit costs as CDs continue to reprice.
• Management is monitoring loan yields, with new loans yielding approximately 6.4%, and expects margin expansion if interest rates remain stable.

Overall, Hope Bancorp reported strong year-over-year growth in key financial metrics while navigating challenges related to credit quality and the integration of recent acquisitions. The outlook remains positive, bolstered by strategic initiatives and a focus on disciplined expense management.