Group 1 - Hope Bancorp, Inc. reported a loss for the second quarter of 2025, attributed to one-time merger-related expenses from the acquisition of Territorial Bancorp [1] - The company's earnings were negatively impacted in the second quarter [1]

Group 1 - The stock of Hope Bancorp, Inc. (HOPE) is experiencing significant attention due to high implied volatility in the options market, particularly the Sept. 19, 2025 $7.5 Call option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in the stock's price, potentially due to an upcoming event [2] - Hope Bancorp currently holds a Zacks Rank 3 (Hold) in the Banks – West industry, which is in the top 28% of the Zacks Industry Rank, indicating a relatively stable outlook [3] Group 2 - Over the past 60 days, there has been mixed sentiment among analysts regarding earnings estimates for Hope Bancorp, with one analyst increasing and another decreasing their estimates, resulting in a slight increase in the Zacks Consensus Estimate from 25 cents to 26 cents per share [3] - The high implied volatility may indicate a developing trading opportunity, as options traders often seek to sell premium on options with high implied volatility, hoping the stock does not move as much as expected by expiration [4]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) Presents unaudited consolidated financial statements and notes for Q2 2025, including impact from Territorial Bancorp acquisition [Consolidated Statements of Financial Condition (Unaudited)](index=4&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition%20(Unaudited)) Consolidated Financial Condition Summary | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | Change (Thousands) | % Change | | :----------------------------------- | :-------------------------- | :---------------------------- | :----------------- | :------- | | Total assets | $18,547,017 | $17,054,008 | $1,493,009 | 8.75% | | Total liabilities | $16,322,900 | $14,919,503 | $1,403,397 | 9.41% | | Total stockholders' equity | $2,224,117 | $2,134,505 | $89,612 | 4.20% | | Loans receivable, net | $14,285,282 | $13,467,745 | $817,537 | 6.07% | | Total deposits | $15,943,355 | $14,327,489 | $1,615,866 | 11.28% | - The increase in total assets was primarily due to the acquisition of Territorial Bancorp Inc., which contributed **$1.93 billion** in identifiable assets[142](index=142&type=chunk)[279](index=279&type=chunk) [Consolidated Statements of (Loss) Income (Unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20(Loss)%20Income%20(Unaudited)) Consolidated Income Statement Summary | Metric | Three Months Ended June 30, 2025 (Thousands) | Three Months Ended June 30, 2024 (Thousands) | Six Months Ended June 30, 2025 (Thousands) | Six Months Ended June 30, 2024 (Thousands) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Total interest income | $239,170 | $232,601 | $456,336 | $492,275 | | Total interest expense | $121,637 | $126,741 | $237,986 | $271,368 | | Net interest income before provision for credit losses | $117,533 | $105,860 | $218,350 | $220,907 | | Provision for credit losses | $15,000 | $1,400 | $19,800 | $4,000 | | Total noninterest income | $(22,956) | $11,071 | $(7,268) | $19,357 | | Total noninterest expense | $109,473 | $80,987 | $193,334 | $165,826 | | Net (loss) income | $(27,881) | $25,270 | $(6,785) | $51,134 | | Basic (Losses) Earnings Per Common Share | $(0.22) | $0.21 | $(0.05) | $0.42 | | Diluted (Losses) Earnings Per Common Share | $(0.22) | $0.21 | $(0.05) | $0.42 | - The Company reported a net loss for Q2 2025 and YTD 2025, primarily due to **$38.9 million** in net losses on sales of investment securities AFS as part of a strategic repositioning and **$17.3 million** in merger and restructuring-related costs from the Territorial acquisition[15](index=15&type=chunk)[231](index=231&type=chunk)[260](index=260&type=chunk)[262](index=262&type=chunk) [Consolidated Statements of Comprehensive Income (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) Consolidated Comprehensive Income Summary | Metric | Three Months Ended June 30, 2025 (Thousands) | Three Months Ended June 30, 2024 (Thousands) | Six Months Ended June 30, 2025 (Thousands) | Six Months Ended June 30, 2024 (Thousands) | | :------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Net (loss) income | $(27,881) | $25,270 | $(6,785) | $51,134 | | Other comprehensive income (loss), net of tax | $34,908 | $(10,852) | $56,468 | $(28,392) | | Total comprehensive income | $7,027 | $14,418 | $49,683 | $22,742 | - Other comprehensive income (loss) significantly improved in 2025, primarily due to a **$43.2 million** change in unrealized net holding gains on AFS securities for the six months ended June 30, 2025, compared to a **$23.1 million** loss in the prior year[17](index=17&type=chunk)[114](index=114&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity (Unaudited)](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Unaudited)) Consolidated Stockholders' Equity Summary | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | Change (Thousands) | | :--------------------------------- | :-------------------------- | :---------------------------- | :----------------- | | Total stockholders' equity | $2,224,117 | $2,134,505 | $89,612 | | Common stock | $146 | $138 | $8 | | Additional paid-in capital | $1,520,129 | $1,445,373 | $74,756 | | Retained earnings | $1,139,913 | $1,181,533 | $(41,620) | | Accumulated other comprehensive loss, net | $(171,404) | $(227,872) | $56,468 | - Stockholders' equity increased by **$89.6 million**, driven by the issuance of **6,976,754** common shares (**$73.3 million**) for the Territorial acquisition and a **$56.5 million** decrease in accumulated other comprehensive loss, partially offset by a net loss and cash dividends[18](index=18&type=chunk)[19](index=19&type=chunk)[112](index=112&type=chunk)[323](index=323&type=chunk) [Consolidated Statements of Cash Flows (Unaudited)](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Consolidated Cash Flow Summary | Cash Flow Activity | Six Months Ended June 30, 2025 (Thousands) | Six Months Ended June 30, 2024 (Thousands) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net cash provided by operating activities | $36,048 | $4,045 | | Net cash provided by investing activities | $656,016 | $426,167 | | Net cash used in financing activities | $(460,529) | $(1,705,135) | | Net change in cash and cash equivalents | $231,535 | $(1,274,923) | | Cash and cash equivalents, beginning of period | $458,199 | $1,928,967 | | Cash and cash equivalents, end of period | $689,734 | $654,044 | - Net cash provided by operating activities increased significantly to **$36.0 million** for the six months ended June 30, 2025, from **$4.0 million** in the prior year, while net cash used in financing activities decreased substantially, reflecting reduced repayments of FRB borrowings[21](index=21&type=chunk) - Non-cash activities for the six months ended June 30, 2025, included the merger with Territorial, acquiring **$1.84 billion** in identifiable assets (net of cash) and assuming **$1.87 billion** in liabilities, with **$73.3 million** in common stock issued as consideration[21](index=21&type=chunk) [Notes to Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) [1. Basis of Presentation](index=13&type=section&id=1.%20Basis%20of%20Presentation) - Hope Bancorp, Inc. (the 'Company') is the holding company for Bank of Hope, operating 46 full-service branches and nine loan production offices across multiple states, and 29 branches in Hawaii under the trade name Territorial Savings following the acquisition of Territorial Bancorp Inc. on April 2, 2025[23](index=23&type=chunk)[30](index=30&type=chunk) - The consolidated financial statements are unaudited, prepared in accordance with SEC rules, and include all necessary adjustments for fair presentation, with certain reclassifications made to prior period amounts[24](index=24&type=chunk)[25](index=25&type=chunk) [2. Investment Securities](index=14&type=section&id=2.%20Investment%20Securities) Investment Securities Portfolio Summary | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :----------------------------------- | :-------------------------- | :---------------------------- | | Investment securities AFS, at fair value | $2,021,643 | $1,823,243 | | Investment securities HTM, at amortized cost | $247,246 | $252,385 | | Total investment securities | $2,268,889 | $2,075,628 | | Gross unrealized losses on AFS securities | $(221,043) | $(299,774) | | Net (losses) gain on sales of AFS securities (3 months) | $(38,856) | $425 | | Net (losses) gain on sales of AFS securities (6 months) | $(38,856) | $425 | - In June 2025, the Company sold **$417.9 million** of lower-yielding AFS securities, resulting in **$38.9 million** in realized losses, to redeploy proceeds into higher-yielding investments[34](index=34&type=chunk)[260](index=260&type=chunk) - The Company acquired **$18.5 million** in AFS and **$516.7 million** in HTM investment securities as part of the Territorial Merger, which were immediately categorized as AFS and sold for **$535.2 million** with no gain or loss impact[33](index=33&type=chunk)[283](index=283&type=chunk) - No allowance for credit losses was required for investment securities AFS or HTM at June 30, 2025, as the majority are U.S. Government agency securities with zero loss expectation, and other securities are expected to be paid in full[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[285](index=285&type=chunk) [3. Equity Investments](index=18&type=section&id=3.%20Equity%20Investments) Equity Investments Summary | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :----------------------------------------- | :-------------------------- | :---------------------------- | | Total equity investments | $88,152 | $39,946 | | Equity investments with readily determinable fair values | $50,500 | $4,300 | | Equity investments without readily determinable fair values | $37,600 | $35,600 | | Net gains from changes in fair value (6 months) | $743 | $(65) | - Equity investments increased by **120.7%** to **$88.2 million** at June 30, 2025, primarily due to **$45.5 million** in purchases of Community Reinvestment Act (CRA) mutual funds[47](index=47&type=chunk)[286](index=286&type=chunk) [4. Loans Receivable and Allowance for Credit Losses](index=19&type=section&id=4.%20Loans%20Receivable%20and%20Allowance%20for%20Credit%20Losses) Loan Portfolio Composition | Loan Portfolio Composition | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | % of Total (June 30, 2025) | | :------------------------- | :-------------------------- | :---------------------------- | :------------------------- | | Commercial real estate (CRE) loans | $8,385,764 | $8,527,008 | 58% | | Commercial and industrial (C&I) loans | $3,725,295 | $3,967,596 | 26% | | Residential mortgage loans | $2,273,427 | $1,082,459 | 16% | | Consumer and other loans | $50,301 | $41,209 | 0% | | Total loans receivable, net of deferred costs and fees | $14,434,787 | $13,618,272 | 100% | | Allowance for credit losses (ACL) | $(149,505) | $(150,527) | N/A | - Loans receivable increased by **6.0%** to **$14.43 billion**, primarily due to **$1.07 billion** in loans acquired from the Territorial Merger, significantly increasing residential mortgage loans' share of the portfolio[54](index=54&type=chunk)[290](index=290&type=chunk) ACL Activity | ACL Activity | Three Months Ended June 30, 2025 (Thousands) | Six Months Ended June 30, 2025 (Thousands) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Balance, beginning of period | $147,412 | $150,527 | | Provision for credit loss on loans | $14,000 | $19,200 | | Net loan charge-offs | $(11,970) | $(20,285) | | Balance, end of period | $149,505 | $149,505 | | ACL to loans receivable | 1.04% | 1.04% | | Nonaccrual loans | $110,739 | $110,739 | | Nonperforming assets | $112,888 | $112,888 | | ACL to nonaccrual loans | 135.01% | 135.01% | - The provision for credit losses increased to **$15.0 million** for Q2 2025 (from **$1.4 million** in Q2 2024), including **$4.5 million** of merger-related provision expenses, driven by increases in C&I and residential mortgage loan provisions[74](index=74&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk) - Nonperforming assets increased by **24.3%** to **$112.9 million** at June 30, 2025, primarily due to the migration of a well-secured CRE loan[296](index=296&type=chunk) [5. Goodwill, Intangible Assets, and Servicing Assets](index=30&type=section&id=5.%20Goodwill,%20Intangible%20Assets,%20and%20Servicing%20Assets) Goodwill, Intangible Assets, and Servicing Assets Summary | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :-------------------------- | :-------------------------- | :---------------------------- | | Goodwill | $478,104 | $464,450 | | Core deposit intangible assets, net | $47,324 | $2,331 | | Servicing assets, net | $11,822 | $10,051 | - Goodwill increased by **$13.7 million** due to the Territorial Merger, with no impairment recorded. A core deposit intangible asset of **$46.5 million** was also recorded from the merger, amortizing over 15 years[83](index=83&type=chunk)[86](index=86&type=chunk) - Servicing assets, primarily SBA and mortgage-related, increased to **$11.8 million** at June 30, 2025, from **$10.1 million** at December 31, 2024, with no valuation allowance for impairment[88](index=88&type=chunk)[89](index=89&type=chunk) [6. Deposits](index=32&type=section&id=6.%20Deposits) Deposit Composition | Deposit Type | June 30, 2025 (Thousands) | % of Total | December 31, 2024 (Thousands) | % of Total | | :-------------------------- | :-------------------------- | :--------- | :---------------------------- | :--------- | | Noninterest bearing | $3,485,502 | 22% | $3,377,950 | 24% | | Money market and NOW accounts | $4,910,645 | 31% | $4,515,251 | 31% | | Savings deposits | $1,192,354 | 7% | $660,484 | 5% | | Time deposits | $6,354,854 | 40% | $5,773,804 | 40% | | Total deposits | $15,943,355 | 100% | $14,327,489 | 100% | - Total deposits increased by **11.3%** to **$15.94 billion**, primarily due to **$1.67 billion** in deposits assumed from the Territorial Merger[93](index=93&type=chunk)[307](index=307&type=chunk) - Brokered deposits decreased to **$797.1 million** at June 30, 2025, from **$1.06 billion** at December 31, 2024, reflecting planned reductions[95](index=95&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk) - Estimated insured deposits were approximately **62%** of total deposits at June 30, 2025, with uninsured deposits totaling **$6.15 billion (38%)**[309](index=309&type=chunk) [7. Borrowings](index=33&type=section&id=7.%20Borrowings) Borrowings Summary | Borrowing Type | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :-------------------------- | :-------------------------- | :---------------------------- | | FHLB and FRB borrowings | $29,752 | $239,000 | | Total borrowing capacity | $5,826,036 | $6,200,266 | | Available borrowing capacity | $5,796,036 | $5,961,266 | | Weighted average effective rate (June 30, 2025) | 1.72% | N/A | | Weighted average effective rate (Dec 31, 2024) | N/A | 4.66% | - Total borrowings significantly decreased to **$29.8 million** at June 30, 2025, from **$239.0 million** at December 31, 2024, consisting entirely of FHLB borrowings[97](index=97&type=chunk)[311](index=311&type=chunk) - The Company assumed **$160.0 million** in FHLB advances from the Territorial acquisition, of which **$125.0 million** was paid off immediately[98](index=98&type=chunk)[312](index=312&type=chunk) [8. Convertible Notes and Subordinated Debentures](index=34&type=section&id=8.%20Convertible%20Notes%20and%20Subordinated%20Debentures) Convertible Notes and Subordinated Debentures Summary | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :-------------------------- | :-------------------------- | :---------------------------- | | Convertible notes, net | $444 | $444 | | Subordinated debentures, net | $109,819 | $109,140 | | Total | $110,263 | $109,584 | - The Company had **$444 thousand** in convertible senior notes outstanding at June 30, 2025, with an initial conversion price of **$22.18** per share, which was anti-dilutive for EPS calculations[101](index=101&type=chunk)[103](index=103&type=chunk)[119](index=119&type=chunk) - Subordinated debentures totaled **$109.8 million** at June 30, 2025, with variable interest rates tied to the three-month SOFR rate, and are treated as capital for regulatory purposes[104](index=104&type=chunk)[105](index=105&type=chunk)[107](index=107&type=chunk)[244](index=244&type=chunk)[315](index=315&type=chunk) [9. Commitments and Contingencies](index=36&type=section&id=9.%20Commitments%20and%20Contingencies) Commitments and Contingencies Summary | Commitment Type | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :------------------------------------------------- | :-------------------------- | :---------------------------- | | Commitments to extend credit | $2,239,010 | $2,255,785 | | Standby letters of credit | $129,138 | $134,548 | | Other letters of credit | $36,791 | $22,874 | | Commitments to fund affordable housing partnerships and CRA investments | $29,902 | $18,845 | | Reserve for unfunded loan commitments | $3,300 | $2,700 | - Loss contingencies for all legal claims totaled **$302 thousand** at June 30, 2025, with management believing no material adverse effect on financial condition[110](index=110&type=chunk)[348](index=348&type=chunk) [10. Stockholders' Equity](index=37&type=section&id=10.%20Stockholders'%20Equity) Stockholders' Equity Summary | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :-------------------------- | :-------------------------- | :---------------------------- | | Total stockholders' equity | $2,224,117 | $2,134,505 | | Accumulated other comprehensive loss, net | $(171,404) | $(227,872) | | Cash dividends declared per common share (Q2) | $0.14 | $0.14 | | Cash dividends declared per common share (YTD) | $0.28 | $0.28 | - Stockholders' equity increased by **$89.6 million**, primarily due to the issuance of **6,976,754** common shares (**$73.3 million**) for the Territorial acquisition and a **$56.5 million** decrease in accumulated other comprehensive loss[111](index=111&type=chunk)[112](index=112&type=chunk)[323](index=323&type=chunk) - The Company has **$35.3 million** remaining under its **$50.0 million** share repurchase program approved in January 2022[113](index=113&type=chunk)[324](index=324&type=chunk)[352](index=352&type=chunk) [11. (Losses) Earnings Per Share ("EPS")](index=38&type=section&id=11.%20(Losses)%20Earnings%20Per%20Share%20(%22EPS%22)) Earnings Per Share Summary | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Basic (Losses) EPS | $(0.22) | $0.21 | $(0.05) | $0.42 | | Diluted (Losses) EPS | $(0.22) | $0.21 | $(0.05) | $0.42 | | Weighted-Average Shares – Basic | 128,001,605 | 120,664,472 | 124,426,400 | 120,425,886 | | Weighted-Average Shares – Diluted | 128,223,991 | 120,939,429 | 124,859,880 | 120,964,149 | - Diluted EPS for Q2 2025 was **$(0.22)**, down from **$0.21** in Q2 2024, reflecting the net loss. Stock options and restricted share awards were anti-dilutive and excluded from diluted EPS calculations for both periods[15](index=15&type=chunk)[118](index=118&type=chunk)[121](index=121&type=chunk) - Shares related to convertible notes were not included in diluted EPS as the conversion price exceeded the market price of the Company's stock[119](index=119&type=chunk) [12. Segment Reporting](index=39&type=section&id=12.%20Segment%20Reporting) - The Company operates as a single reportable segment, primarily banking operations, with the CEO as the chief operating decision maker (CODM) evaluating performance based on revenue streams, comparative product pricing, and significant expenses[122](index=122&type=chunk)[123](index=123&type=chunk) - The Territorial Merger did not result in additional operating segments, as Territorial branches integrated into the Company's existing single segment[123](index=123&type=chunk) [13. Revenue Recognition](index=40&type=section&id=13.%20Revenue%20Recognition) - Revenue recognition primarily follows ASC 606 for noninterest revenue streams like deposit-related fees and wire transfer fees, with performance obligations satisfied over time for service charges and at a point in time for transaction-based fees[125](index=125&type=chunk)[126](index=126&type=chunk) Revenue Streams Summary | Revenue Stream | Three Months Ended June 30, 2025 (Thousands) | Three Months Ended June 30, 2024 (Thousands) | Six Months Ended June 30, 2025 (Thousands) | Six Months Ended June 30, 2024 (Thousands) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Total service fees on deposit accounts | $3,106 | $2,681 | $6,027 | $5,268 | | Total wire transfer and foreign currency fees | $1,058 | $974 | $2,044 | $1,786 | [14. Stock-Based Compensation](index=41&type=section&id=14.%20Stock-Based%20Compensation) - The 2024 Equity Incentive Plan, approved in May 2024, reserved **4,500,000 shares** for grants, with **2,555,341 shares** remaining available at June 30, 2025[128](index=128&type=chunk)[129](index=129&type=chunk) Stock-Based Compensation Summary | Metric | Six Months Ended June 30, 2025 (Thousands) | | :----------------------------------------- | :--------------------------------------- | | Total charged against income | $3,600 | | Income tax benefit recognized | $1,100 | | Unrecognized compensation expense (restricted stock/performance units) | $16,800 | | Weighted average vesting period (restricted stock/performance units) | 2.38 years | [15. Income Taxes](index=43&type=section&id=15.%20Income%20Taxes) Income Tax Summary | Metric | Three Months Ended June 30, 2025 (Thousands) | Three Months Ended June 30, 2024 (Thousands) | Six Months Ended June 30, 2025 (Thousands) | Six Months Ended June 30, 2024 (Thousands) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Pretax (loss) income | $(29,896) | $34,544 | $(2,052) | $70,438 | | Income tax (benefit) provision | $(2,015) | $9,274 | $4,733 | $19,304 | | Effective tax rate | 6.74% | 26.85% | (230.65)% | 27.41% | - The effective tax rate changes were significantly impacted by merger-related expenses, securities portfolio sales, and a **$4.9 million** incremental tax expense due to a change in California's state tax apportionment law, effective January 1, 2025[137](index=137&type=chunk)[272](index=272&type=chunk)[275](index=275&type=chunk) - The Company recorded an income tax provision of **$4.7 million** on a pretax loss of **$2.1 million** for the six months ended June 30, 2025, resulting in a negative effective tax rate[136](index=136&type=chunk) [16. Business Combinations](index=42&type=section&id=16.%20Business%20Combinations) - On April 2, 2025, the Company completed the acquisition of Territorial Bancorp Inc. in an all-stock transaction, issuing **6,976,754 shares** of common stock valued at **$73.3 million**[30](index=30&type=chunk)[112](index=112&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) - The acquisition expanded the Company's domestic presence to Hawaii, increased its low-cost deposit base, and diversified its loan portfolio, adding **$1.07 billion** in loans and assuming **$1.67 billion** in deposits[142](index=142&type=chunk)[145](index=145&type=chunk) Territorial Acquisition Financial Impact | Acquired Assets / Assumed Liabilities (April 2, 2025) | Amount (Thousands) | | :---------------------------------------------------- | :----------------- | | Total consideration paid | $73,331 | | Cash and cash equivalents acquired | $86,701 | | Investment securities acquired | $535,195 | | Loans receivable acquired | $1,067,238 | | Deposits assumed | $(1,670,633) | | Borrowings assumed | $(160,770) | | Goodwill recognized | $13,654 | | Core deposit intangible recognized | $46,520 | - Merger-related provision for credit losses was **$4.46 million** and merger-related expenses were **$17.14 million** for the three months ended June 30, 2025[162](index=162&type=chunk) [17. Derivative Financial Instruments](index=48&type=section&id=17.%20Derivative%20Financial%20Instruments) Derivative Financial Instruments Summary | Derivative Type | Notional Amount (June 30, 2025, Thousands) | Fair Value (Other Assets, Thousands) | Fair Value (Other Liabilities, Thousands) | | :----------------------------------- | :--------------------------------------- | :----------------------------------- | :-------------------------------------- | | Derivatives designated as cash flow hedges | $1,125,000 | $291 | $0 | | Derivatives not designated as hedges | $2,728,493 | $38,226 | $(39,401) | - The Company uses interest rate swaps, collars, caps, floors, foreign exchange contracts, and risk participation agreements for interest rate risk management and customer services[164](index=164&type=chunk) - During the six months ended June 30, 2025, the Company terminated **$600.0 million** in notional value of receive fixed swaps to reduce exposure to higher interest rates, resulting in **$6.5 million** in pre-tax losses in AOCI to be amortized[169](index=169&type=chunk) [18. Fair Value Measurements](index=51&type=section&id=18.%20Fair%20Value%20Measurements) - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs requiring significant management judgment)[177](index=177&type=chunk)[183](index=183&type=chunk) Fair Value Measurements by Level | Asset/Liability | June 30, 2025 (Thousands) | Level 1 (Thousands) | Level 2 (Thousands) | Level 3 (Thousands) | | :----------------------------------------- | :-------------------------- | :------------------ | :------------------ | :------------------ | | Investment securities AFS | $2,021,643 | $0 | $2,020,836 | $807 | | Equity investments with readily determinable fair value | $50,538 | $50,538 | $0 | $0 | | Interest rate contracts (assets) | $38,198 | $0 | $38,198 | $0 | | Interest rate contracts (liabilities) | $38,872 | $0 | $38,872 | $0 | | Collateral-dependent loans receivable at fair value | $49,818 | $0 | $0 | $49,818 | | Loans held for sale, net | $6,329 | $0 | $0 | $6,329 | - Loans receivable, net, and subordinated debentures are primarily classified as Level 3 fair value measurements due to the use of unobservable inputs like discounted cash flow analysis and credit risk assessments[194](index=194&type=chunk)[195](index=195&type=chunk) [19. Leases](index=59&type=section&id=19.%20Leases) - The Company's operating leases primarily consist of real estate for bank branches and offices, with terms ranging from 1 to 13 years. No finance leases were held at June 30, 2025[197](index=197&type=chunk) Lease Metrics Summary | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :----------------------------------- | :-------------------------- | :---------------------------- | | Operating lease ROU assets | $58,372 | $39,432 | | Long-term lease liabilities | $44,217 | $30,113 | | Net lease cost (6 months) | $10,403 | $8,789 | | Weighted-average remaining lease term | 5.3 years | 3.8 years | | Weighted-average discount rate | 3.87% | 2.91% | - The Territorial acquisition added **$22.7 million** in ROU assets and **$21.1 million** in related lease liabilities, including 26 real estate and 1 equipment leases[198](index=198&type=chunk) [20. Investments in Tax Credit Structures](index=61&type=section&id=20.%20Investments%20in%20Tax%20Credit%20Structures) - The Company invests in affordable housing partnerships and renewable solar energy projects, generating low-income housing tax credits (LIHTC) and other tax benefits[203](index=203&type=chunk) Tax Credit Investments Summary | Investment Type | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :----------------------------------------- | :-------------------------- | :---------------------------- | | Investments in solar tax credit (PAM) | $2,787 | $3,425 | | Investments in affordable housing partnerships (Equity method) | $30,848 | $32,354 | | Unfunded commitments (solar tax credit) | $2,758 | $2,758 | | Unfunded commitments (affordable housing) | $23,726 | $11,283 | | Total tax credits and benefits (6 months) | $6,397 | $5,534 | | Total amortization (6 months) | $5,029 | $4,417 | [21. Regulatory Matters](index=62&type=section&id=21.%20Regulatory%20Matters) - Both Hope Bancorp, Inc. and Bank of Hope exceeded all regulatory minimum capital ratios, including the conservation buffer, at June 30, 2025[209](index=209&type=chunk)[212](index=212&type=chunk) - The Bank was categorized as 'well-capitalized' under regulatory frameworks at June 30, 2025, and December 31, 2024[210](index=210&type=chunk)[325](index=325&type=chunk) Regulatory Capital Ratios | Capital Ratio (Company) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Common equity Tier 1 capital ratio | 12.06% | 13.06% | | Tier 1 capital ratio | 12.76% | 13.79% | | Total capital ratio | 13.76% | 14.78% | | Leverage capital ratio | 10.57% | 11.83% | | Capital Conservation Buffer (Required) | 7.00% (CET1), 8.50% (Tier 1), 10.50% (Total) | 7.00% (CET1), 8.50% (Tier 1), 10.50% (Total) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=62&type=section&id=Item%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Analyzes Q2 2025 financial condition and results, including Territorial acquisition and non-GAAP reconciliation [GENERAL](index=64&type=section&id=GENERAL) - Hope Bancorp, Inc. is the holding company of Bank of Hope, with **$18.55 billion** in total assets at June 30, 2025. The acquisition of Territorial Savings expanded its presence to Hawaii, making it the largest regional bank serving multicultural customers across the U.S. and Hawaii[215](index=215&type=chunk) - The Bank's principal business involves earning interest on loans and investment securities, funded by deposits and borrowings, and generating income from fee-based products and loan sales. Major expenses include interest on deposits/borrowings, credit loss provisions, and operating expenses[216](index=216&type=chunk) [Selected Financial Data](index=65&type=section&id=Selected%20Financial%20Data) Selected Financial Performance Data | Metric | Q2 2025 (Thousands) | Q2 2024 (Thousands) | YTD 2025 (Thousands) | YTD 2024 (Thousands) | | :----------------------------------------- | :------------------ | :------------------ | :------------------- | :------------------- | | Net (loss) income (GAAP) | $(27,881) | $25,270 | $(6,785) | $51,134 | | Net income, excluding notable items (Non-GAAP) | $24,531 | $26,579 | $47,405 | $54,170 | | Diluted EPS (GAAP) | $(0.22) | $0.21 | $(0.05) | $0.42 | | Diluted EPS, excluding notable items (Non-GAAP) | $0.19 | $0.22 | $0.38 | $0.45 | | ROA (GAAP) | (0.60)% | 0.59% | (0.08)% | 0.56% | | ROA, excluding notable items (Non-GAAP) | 0.52% | 0.62% | 0.53% | 0.60% | | Efficiency ratio (GAAP) | 115.75% | 69.26% | 91.59% | 69.02% | | Efficiency ratio, excluding notable items (Non-GAAP) | 69.09% | 67.67% | 69.43% | 67.23% | - Notable items for Q2 2025 totaled **$52.4 million** after tax, including **$30.5 million** from investment securities repositioning losses, **$17.1 million** in merger-related costs, and a **$4.9 million** impact from a California state tax apportionment law change[231](index=231&type=chunk)[225](index=225&type=chunk) Selected Balance Sheet Data | Balance Sheet Data | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :----------------------------------- | :-------------------------- | :---------------------------- | | Total assets | $18,547,017 | $17,054,008 | | Total loans receivable | $14,434,787 | $13,618,272 | | Total deposits | $15,943,355 | $14,327,489 | | Stockholders' equity | $2,224,117 | $2,134,505 | | Tangible Common Equity (TCE) | $1,698,689 | $1,643,699 | | TCE ratio | 9.43% | 9.72% | [Results of Operations](index=69&type=section&id=Results%20of%20Operations) [Overview](index=69&type=section&id=Overview) - Net loss for Q2 2025 was **$27.9 million**, or **$(0.22)** per diluted share, a **$53.2 million** decrease YoY, primarily due to **$52.4 million** in notable items including investment securities losses and merger-related costs[230](index=230&type=chunk)[231](index=231&type=chunk) - Excluding notable items, Q2 2025 net income was **$24.5 million**, or **$0.19** per diluted share, down from **$26.6 million**, or **$0.22** per diluted share, in Q2 2024, mainly due to lower noninterest income and higher noninterest expense and provision for loan losses[232](index=232&type=chunk) [Net Interest Income and Net Interest Margin](index=69&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Net Interest Income and Margin Trends | Metric | Q2 2025 (Thousands) | Q2 2024 (Thousands) | YTD 2025 (Thousands) | YTD 2024 (Thousands) | | :----------------------------------------- | :------------------ | :------------------ | :------------------- | :------------------- | | Net interest income before provision for credit losses | $117,533 | $105,860 | $218,350 | $220,907 | | Net interest margin | 2.69% | 2.62% | 2.62% | 2.58% | | Weighted average yield on loans | 5.88% | 6.20% | 5.88% | 6.23% | | Weighted average cost of deposits | 2.96% | 3.39% | 3.07% | 3.37% | - Q2 2025 net interest income increased by **11.0%** YoY to **$117.5 million**, driven by lower cost of deposits and increased average interest-earning assets, despite lower loan yields[235](index=235&type=chunk) - The net interest margin for Q2 2025 increased to **2.69%** (from **2.62%** in Q2 2024), primarily due to lower weighted average costs of interest-bearing deposits and increased average loan balances[238](index=238&type=chunk) - Accretion of discount on acquired loans from the Territorial Merger contributed **$4.1 million** to net interest income for the three and six months ended June 30, 2025[237](index=237&type=chunk) [Provision for Credit Losses](index=74&type=section&id=Provision%20for%20Credit%20Losses) Provision for Credit Losses Summary | Metric | Q2 2025 (Thousands) | Q2 2024 (Thousands) | YTD 2025 (Thousands) | YTD 2024 (Thousands) | | :----------------------------------- | :------------------ | :------------------ | :------------------- | :------------------- | | Provision for credit losses | $15,000 | $1,400 | $19,800 | $4,000 | | Merger-related provision for credit losses | $4,461 | $0 | $4,461 | $0 | | Provision for unfunded loan commitments | $1,000 | $(300) | $600 | $(1,300) | - The Q2 2025 provision for credit losses increased by **$13.6 million** YoY to **$15.0 million**, including **$4.5 million** from merger-related expenses, driven by higher provisions for C&I and residential mortgage loans[252](index=252&type=chunk)[253](index=253&type=chunk) - Net loan charge-offs as a percentage of average loans (annualized) increased to **0.33%** in Q2 2025 from **0.13%** in Q2 2024, primarily due to C&I loan charge-offs[301](index=301&type=chunk) [Noninterest Income](index=75&type=section&id=Noninterest%20Income) Noninterest Income Summary | Metric | Q2 2025 (Thousands) | Q2 2024 (Thousands) | YTD 2025 (Thousands) | YTD 2024 (Thousands) | | :----------------------------------- | :------------------ | :------------------ | :------------------- | :------------------- | | Total noninterest income | $(22,956) | $11,071 | $(7,268) | $19,357 | | Net losses on sales of investment securities AFS | $(38,856) | $425 | $(38,856) | $425 | | Net gains on sales of SBA loans | $3,998 | $1,980 | $7,129 | $1,980 | | Swap fees | $1,662 | $25 | $2,307 | $168 | | Other income and fees | $5,544 | $4,290 | $12,582 | $8,000 | - Total noninterest income decreased by **$34.0 million** YoY to **$(23.0) million** in Q2 2025, primarily due to **$38.9 million** in net losses from the strategic repositioning of AFS investment securities[256](index=256&type=chunk)[260](index=260&type=chunk) - Offsetting the decline, net gains on SBA loan sales increased by **101.9%** YoY to **$4.0 million** in Q2 2025, and swap fees surged by **6,548%** due to increased loan originations[257](index=257&type=chunk)[258](index=258&type=chunk)[259](index=259&type=chunk) [Noninterest Expense](index=77&type=section&id=Noninterest%20Expense) Noninterest Expense Summary | Metric | Q2 2025 (Thousands) | Q2 2024 (Thousands) | YTD 2025 (Thousands) | YTD 2024 (Thousands) | | :----------------------------------- | :------------------ | :------------------ | :------------------- | :------------------- | | Total noninterest expense | $109,473 | $80,987 | $193,334 | $165,826 | | Merger and restructuring-related costs | $17,281 | $2,165 | $19,800 | $3,611 | | Salaries and employee benefits | $52,834 | $44,107 | $101,294 | $91,684 | | Occupancy expense | $8,884 | $6,906 | $16,050 | $13,692 | | Furniture and equipment | $7,817 | $5,475 | $13,530 | $10,815 | | Earned interest credit expense | $3,310 | $6,139 | $6,397 | $11,973 | - Total noninterest expense increased by **35.2%** YoY to **$109.5 million** in Q2 2025, primarily driven by **$17.3 million** in merger and restructuring-related costs from the Territorial acquisition[262](index=262&type=chunk)[268](index=268&type=chunk) - Salaries and employee benefits increased by **19.8%** YoY due to higher headcount from the Territorial acquisition, while occupancy and furniture/equipment expenses also rose due to increased Bank locations and depreciation[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) - Earned interest credit expense decreased by **46.1%** YoY due to reductions in the Federal Funds rate[267](index=267&type=chunk) [Provision for Income Taxes](index=78&type=section&id=Provision%20for%20Income%20Taxes) Income Tax Provision Summary | Metric | Q2 2025 (Thousands) | Q2 2024 (Thousands) | YTD 2025 (Thousands) | YTD 2024 (Thousands) | | :----------------------------------- | :------------------ | :------------------ | :------------------- | :------------------- | | Income tax (benefit) provision | $(2,015) | $9,274 | $4,733 | $19,304 | | Effective tax rate | 6.74% | 26.85% | (230.65)% | 27.41% | | Total tax credits (6 months) | $6,397 | $5,534 | | Amortization on renewable energy investment (6 months) | $638 | $0 | - The effective tax rate for Q2 2025 was **6.74%** (on a pretax loss), significantly lower than **26.85%** in Q2 2024, influenced by merger-related expenses, securities sales, and a California state tax apportionment law change[270](index=270&type=chunk)[272](index=272&type=chunk)[275](index=275&type=chunk) - The Company recorded an incremental tax expense of **$4.9 million** in Q2 2025 due to the change in California's state tax apportionment law[275](index=275&type=chunk) [Financial Condition](index=80&type=section&id=Financial%20Condition) [Cash and Cash Equivalents](index=80&type=section&id=Cash%20and%20Cash%20Equivalents) Cash and Cash Equivalents Balances | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :-------------------------- | :-------------------------- | :---------------------------- | | Cash and cash equivalents | $689,734 | $458,199 | - Cash and cash equivalents increased to **$689.7 million** at June 30, 2025, from **$458.2 million** at December 31, 2024, partly due to **$86.7 million** acquired in the Territorial acquisition[280](index=280&type=chunk) [Investment Securities Portfolio](index=80&type=section&id=Investment%20Securities%20Portfolio) Investment Securities Portfolio Balances | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :----------------------------------- | :-------------------------- | :---------------------------- | | Investment securities AFS, at fair value | $2,021,643 | $1,823,243 | | Investment securities HTM, at amortized cost | $247,246 | $252,385 | | Net unrealized loss on AFS securities | $(217,400) | $(299,400) | - The net unrealized loss on AFS securities decreased to **$217.4 million** at June 30, 2025, from **$299.4 million** at December 31, 2024, reflecting market interest rate movements and Q2 sales[281](index=281&type=chunk) - The Company purchased **$686.7 million**, sold **$953.1 million**, and had **$84.3 million** in pay-downs and **$35.1 million** in calls of investment securities during the six months ended June 30, 2025[282](index=282&type=chunk) [Equity Investments](index=80&type=section&id=Equity%20Investments) Equity Investments Balances | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :----------------------------------------- | :-------------------------- | :---------------------------- | | Total equity investments | $88,152 | $39,946 | | Equity investments with readily determinable fair values | $50,500 | $4,300 | | Equity investments without readily determinable fair values | $37,600 | $35,600 | - Equity investments increased by **120.7%** to **$88.2 million**, primarily driven by **$45.5 million** in purchases of CRA mutual funds[286](index=286&type=chunk) [Loans Held For Sale](index=81&type=section&id=Loans%20Held%20For%20Sale) Loans Held For Sale Balances | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :-------------------------- | :-------------------------- | :---------------------------- | | Loans held for sale | $12,051 | $14,491 | | SBA loans sold (YTD) | $117,300 | N/A | | Residential mortgage loans sold (YTD) | $7,900 | N/A | | C&I loans sold (YTD) | $60,000 | N/A | - Loans held for sale decreased by **16.8%** to **$12.1 million**, consisting of C&I, residential mortgage, and consumer credit card loans[289](index=289&type=chunk) [Loans Receivable](index=81&type=section&id=Loans%20Receivable) Loans Receivable Composition | Loan Portfolio Composition | June 30, 2025 (Thousands) | % of Total | December 31, 2024 (Thousands) | % of Total | | :------------------------- | :-------------------------- | :--------- | :---------------------------- | :--------- | | CRE loans | $8,385,764 | 58% | $8,527,008 | 63% | | C&I loans | $3,725,295 | 26% | $3,967,596 | 29% | | Residential mortgage loans | $2,273,427 | 16% | $1,082,459 | 8% | | Consumer and other loans | $50,301 | 0% | $41,209 | 0% | | Total loans receivable | $14,434,787 | 100% | $13,618,272 | 100% | - Loans receivable increased by **6.0%** to **$14.43 billion**, primarily due to **$1.07 billion** in loans acquired from the Territorial Merger, which significantly increased residential mortgage loans' share of the portfolio to **16%**[290](index=290&type=chunk) CRE Loan Portfolio Breakdown | CRE Loan Type (June 30, 2025) | Amount (Thousands) | % | Weighted Average LTV | | :---------------------------- | :----------------- | :- | :------------------- | | Multi-tenant retail | $1,589,994 | 19% | 41% | | Industrial warehouses | $1,260,991 | 15% | 40% | | Multifamily | $1,211,785 | 14% | 59% | | Gas stations and car washes | $1,106,007 | 13% | 49% | | Hotels/motels | $754,449 | 9% | 41% | | Office | $340,329 | 4% | 56% | | Total CRE loans | $8,385,764 | 100% | 46% | [Nonperforming Assets](index=83&type=section&id=Nonperforming%20Assets) Nonperforming Assets Summary | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :----------------------------------- | :-------------------------- | :---------------------------- | | Nonaccrual loans | $110,739 | $90,564 | | Accruing delinquent loans past due 90 days or more | $2,149 | $229 | | Total nonperforming loans | $112,888 | $90,793 | | Total nonperforming assets | $112,888 | $90,793 | | Nonperforming assets to total assets | 0.61% | 0.53% | | Nonaccrual loans to loans receivable | 0.77% | 0.67% | - Nonperforming assets increased by **24.3%** to **$112.9 million** at June 30, 2025, primarily due to the migration of a well-secured CRE loan[296](index=296&type=chunk) [Allowance for Credit Losses](index=83&type=section&id=Allowance%20for%20Credit%20Losses) Allowance for Credit Losses by Loan Segment | Loan Segment | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :-------------------------- | :-------------------------- | :---------------------------- | | CRE loans | $77,300 | $88,374 | | C&I loans | $62,547 | $57,243 | | Residential mortgage loans | $9,113 | $4,438 | | Consumer and other loans | $545 | $472 | | Total ACL | $149,505 | $150,527 | | ACL to loans receivable | 1.04% | 1.11% | - The ACL decreased slightly to **$149.5 million** at June 30, 2025, from **$150.5 million** at December 31, 2024, with the coverage ratio decreasing to **1.04%** from **1.11%**[298](index=298&type=chunk) - The decrease in ACL was primarily due to a decline in CRE loan ACL, offset by increases in C&I and residential mortgage loan ACLs, the latter driven by the Territorial acquisition[300](index=300&type=chunk) [Investments in Tax Credit Structures](index=85&type=section&id=Investments%20in%20Tax%20Credit%20Structures) Tax Credit Investments and Commitments | Investment Type | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :----------------------------------------- | :-------------------------- | :---------------------------- | | Investments in affordable housing partnerships | $30,800 | $32,400 | | Investments in solar tax credits | $2,800 | $3,400 | | Unfunded commitments (affordable housing) | $23,700 | $11,300 | | Unfunded commitments (solar tax credits) | $2,800 | $2,800 | - Investments in affordable housing partnerships decreased to **$30.8 million** due to amortization, while unfunded commitments for these partnerships more than doubled to **$23.7 million**[305](index=305&type=chunk) [Deposits, Borrowings, Convertible Notes, and Subordinated Debentures](index=85&type=section&id=Deposits,%20Borrowings,%20Convertible%20Notes,%20and%20Subordinated%20Debentures) Deposits, Borrowings, and Debentures Summary | Deposit Type | June 30, 2025 (Thousands) | % of Total | December 31, 2024 (Thousands) | % of Total | | :-------------------------- | :-------------------------- | :--------- | :---------------------------- | :--------- | | Demand, noninterest bearing | $3,485,502 | 22% | $3,377,950 | 24% | | Money market, interest bearing demand and savings | $6,102,999 | 38% | $5,175,735 | 36% | | Time deposits | $6,354,854 | 40% | $5,773,804 | 40% | | Total deposits | $15,943,355 | 100% | $14,327,489 | 100% | | Brokered deposits | $797,100 | N/A | $1,060,000 | N/A | | FHLB and FRB borrowings | $29,800 | N/A | $239,000 | N/A | | Convertible notes, net | $444 | N/A | $444 | N/A | | Subordinated debentures | $109,800 | N/A | $109,100 | N/A | - Total deposits increased by **11.3%** to **$15.94 billion**, primarily due to **$1.67 billion** from the Territorial acquisition, while brokered deposits decreased due to planned reductions[307](index=307&type=chunk)[308](index=308&type=chunk) - Borrowings significantly decreased to **$29.8 million** (all FHLB) from **$239.0 million**, with **$125.0 million** of assumed FHLB advances from Territorial paid off immediately[311](index=311&type=chunk)[312](index=312&type=chunk) [Off-Balance-Sheet Activities and Contractual Obligations](index=86&type=section&id=Off-Balance-Sheet%20Activities%20and%20Contractual%20Obligations) - The Company engages in traditional off-balance-sheet credit-related financial instruments (commitments to extend credit, standby letters of credit), interest rate swap contracts, foreign exchange contracts, and commitments related to affordable housing partnership investments[316](index=316&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk)[321](index=321&type=chunk) - These activities are part of normal business to meet customer financing needs and manage risk, with no anticipated material impact on future operations or financial condition[317](index=317&type=chunk)[322](index=322&type=chunk) [Stockholders' Equity and Regulatory Capital](index=87&type=section&id=Stockholders'%20Equity%20and%20Regulatory%20Capital) Stockholders' Equity and Capital Summary | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :----------------------------------- | :-------------------------- | :---------------------------- | | Total stockholders' equity | $2,224,117 | $2,134,505 | | Common stock issued (Territorial acquisition) | $73,300 | N/A | | Decrease in AOCI | $56,500 | N/A | | Cash dividends paid | $(34,800) | N/A | | Net loss | $(6,800) | N/A | - Stockholders' equity increased by **$89.6 million**, driven by **$73.3 million** in common stock issued for the Territorial acquisition and a **$56.5 million** decrease in accumulated other comprehensive loss, partially offset by net loss and dividends[323](index=323&type=chunk) - The Bank was categorized as 'well-capitalized' at June 30, 2025, exceeding all regulatory minimum capital ratios[325](index=325&type=chunk)[326](index=326&type=chunk) [Liquidity Management](index=89&type=section&id=Liquidity%20Management) - The Company manages liquidity risk to meet obligations without unacceptable losses, considering deposit stability, marketability of investments, alternative funding sources, and credit demand[327](index=327&type=chunk) - Primary liquidity sources include deposits, federal funds facilities, and FHLB/FRB borrowings, augmented by loan/securities payments and sales[328](index=328&type=chunk) - At June 30, 2025, total borrowing capacity, cash, and unpledged securities amounted to **$8.44 billion**, including **$5.80 billion** in available borrowing capacity from FHLB and FRB, and **$1.95 billion** in unpledged AFS securities[329](index=329&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=88&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Details market risk, primarily interest rate risk, and management strategies, including NII and EVE sensitivity [Interest Rate Risk](index=90&type=section&id=Interest%20Rate%20Risk) - Interest rate risk is the most significant market risk, measured by potential changes in Net Interest Income (NII) and Economic Value of Equity (EVE), encompassing repricing, basis, yield curve, and options risk[332](index=332&type=chunk)[336](index=336&type=chunk) - The Asset and Liability Management Committee (ALM) manages interest rate risk, aiming to reduce earnings sensitivity to rate fluctuations while maintaining liquidity and capital[333](index=333&type=chunk)[334](index=334&type=chunk) [Net Interest Income Sensitivity Simulation](index=91&type=section&id=Net%20Interest%20Income%20Sensitivity%20Simulation) Net Interest Income Sensitivity Analysis | Interest Rate Change (basis points) | June 30, 2025 NII Sensitivity | June 30, 2024 NII Sensitivity | | :---------------------------------- | :---------------------------- | :---------------------------- | | (300) | (5.7)% | (5.5)% | | (200) | (4.0)% | (3.3)% | | (100) | (2.0)% | (1.0)% | | +100 | 1.9% | (0.2)% | | +200 | 4.0% | (2.3)% | | +300 | 5.8% | (4.3)% | - The NII sensitivity profile shows increased positive sensitivity to rising rates and reduced negative sensitivity to falling rates at June 30, 2025, compared to June 30, 2024[339](index=339&type=chunk) - This change is attributed to the termination of the receive fixed swap portfolio and growth in time deposit balances, partially offset by increased fixed-rate mortgage balances from the Territorial acquisition[339](index=339&type=chunk) [Economic Value of Equity Sensitivity](index=91&type=section&id=Economic%20Value%20of%20Equity%20Sensitivity) Economic Value of Equity Sensitivity Analysis | Interest Rate Change (basis points) | June 30, 2025 EVE Sensitivity | June 30, 2024 EVE Sensitivity | | :---------------------------------- | :---------------------------- | :---------------------------- | | (300) | 6.7% | 3.2% | | (200) | 6.6% | 3.9% | | (100) | 4.2% | 2.7% | | +100 | (5.0)% | (5.5)% | | +200 | (10.6)% | (12.0)% | | +300 | (16.6)% | (19.0)% | - The EVE profile at June 30, 2025, shows increased positive sensitivity to falling rates and reduced negative sensitivity to rising rates compared to the prior year[341](index=341&type=chunk) - These changes are due to the active reduction of the investment portfolio duration, termination of receive fixed swaps, and an increase in low-beta, long-duration retail deposits, partially offset by fixed-rate residential mortgage loans from the Territorial acquisition[341](index=341&type=chunk) [Item 4. Controls and Procedures](index=91&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) Confirms effective disclosure controls and procedures, with no material changes to internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=92&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, and determined they were effective[344](index=344&type=chunk) [Changes in Internal Control over Financial Reporting](index=92&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There have been no changes in internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[345](index=345&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=93&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) Details legal claims and accrued loss contingencies, with management expecting no material adverse financial impact - Accrued loss contingencies for all legal claims totaled approximately **$302 thousand** at June 30, 2025[348](index=348&type=chunk) - Management believes that none of these legal claims, individually or in the aggregate, will have a material adverse effect on the results of operations or financial condition of the Company[348](index=348&type=chunk) [Item 1A. Risk Factors](index=93&type=section&id=Item%201A.%20RISK%20FACTORS) No material changes to risk factors from the prior Annual Report on Form 10-K were identified - No material changes to risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2024, were identified[349](index=349&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=94&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) No unregistered equity sales occurred; **$35.3 million** remains in the **$50.0 million** share repurchase program - No unregistered sales of equity securities occurred during the three months ended June 30, 2025[351](index=351&type=chunk) - The Company's **$50.0 million** stock repurchase program had **$35.3 million** remaining as of June 30, 2025, with no shares repurchased during the quarter[352](index=352&type=chunk)[353](index=353&type=chunk) [Item 3. Defaults Upon Senior Securities](index=94&type=section&id=Item%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The Company reported no defaults upon senior securities during the period - None[354](index=354&type=chunk) [Item 4. Mine Safety Disclosures](index=94&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the Company - Not Applicable[355](index=355&type=chunk) [Item 5. Other Information](index=94&type=section&id=Item%205.%20OTHER%20INFORMATION) No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[356](index=356&type=chunk) [Item 6. Exhibits](index=94&type=section&id=Item%206.%20EXHIBITS) Lists all exhibits filed with the Quarterly Report on Form 10-Q, including certifications and XBRL data - The exhibits include certifications from the CEO and CFO (31.1, 31.2, 32.1, 32.2), corporate governance documents (3.1, 3.2), and Inline XBRL Taxonomy Extension documents (101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[360](index=360&type=chunk)

Financial Data and Key Metrics Changes - Net income for Q2 2025, excluding notable items, totaled $24.5 million, up 7% from $22.9 million in Q1 2025 [5] - Reported a net loss of $27.9 million for Q2 2025 due to one-time losses from selling lower-yielding legacy securities and merger-related items [5] - Pretax pre-provision net revenue, excluding notable items, grew to $41.2 million in Q2 2025, up 17% from $35.2 million in Q1 2025 [6] Business Line Data and Key Metrics Changes - Total deposits grew to $15.9 billion, an increase of 10% from the prior quarter, driven by the acquisition of Territorial Bancorp [8] - Loans receivable increased to $14.4 billion, up 8% from the end of the prior quarter, reflecting the addition of Territorial's loan portfolio [9] - Organic loan production increased by 57% from Q1 2025, contributing to modest net growth in the legacy portfolio [10] Market Data and Key Metrics Changes - Average cost of interest-bearing deposits declined by 37 basis points quarter over quarter, and average cost of total deposits decreased by 22 basis points [8] - Broker deposits decreased by $183 million or 19% quarter over quarter, with the broker deposits ratio declining to 5% of total deposits [9] Company Strategy and Development Direction - The acquisition of Territorial Bancorp is seen as a strategic move to enter the Hawaii market, enhancing growth opportunities [4] - Strengthening the deposit franchise remains a key priority, with a focus on reducing broker deposit exposure and improving the cost of funds [8] Management's Comments on Operating Environment and Future Outlook - Management expects loan growth in 2025 to be at a high single-digit percentage rate, driven by improved frontline productivity and hiring [24] - The company anticipates net interest income growth in the high single-digit percentage range for 2025, despite the negative impact of delayed Fed rate cuts [25] Other Important Information - The company declared a quarterly common stock dividend of $0.14 per share, payable on August 15, 2025 [7] - The effective tax rate is expected to be approximately 14% for the third and fourth quarters, reflecting changes in California state tax apportionment law [26] Q&A Session Summary Question: Any updates on fee income expectations for the second half of the year? - Management highlighted positive drivers for fee income growth, including customer swap fee income and loan-related fees [30] Question: What is the average yield on new loan production? - The average yield on new production was approximately 6.76% [67] Question: What is the expected impact of the Territorial acquisition on cost savings? - Management indicated that there are still integration and cost savings expected in the second half of the year, but specifics will be shared later [35] Question: How is the company viewing asset quality in the current environment? - Management expressed cautious optimism regarding asset quality, noting a decline in criticized loans and stable overall credit quality [50] Question: What is the target loan-to-deposit ratio? - The target loan-to-deposit ratio is up to 95%, with current levels below 91% [57]

Financial Data and Key Metrics Changes - Net income for the second quarter of 2025, excluding notable items, totaled $24,500,000, up 7% from $22,900,000 in the preceding first quarter [5] - Reported a net loss of $27,900,000 for the second quarter due to one-time losses from selling lower yielding legacy securities and merger-related items [5] - Pretax pre-provision net revenue excluding notable items grew to $41,200,000, up 17% from $35,200,000 in the first quarter [6] - Net interest income totaled $118,000,000 for the second quarter, an increase of 17% from the prior quarter [11] - Net interest margin increased by 15 basis points quarter over quarter to 2.69 for the second quarter [14] Business Line Data and Key Metrics Changes - Total deposits grew to $15,900,000,000, an increase of 10% from the end of the prior quarter [7] - Loans receivable of $14,400,000,000 were up 8% from the end of the prior quarter, reflecting the addition of Territorial's loan portfolio [8] - Organic loan production increased 57% from the first quarter level [8] - Noninterest income of $15,900,000, excluding notable losses, was up 44% year over year [15] Market Data and Key Metrics Changes - Broker deposits decreased by $183,000,000 or 19% quarter over quarter, with the broker deposits ratio declining to 5% of total deposits [8] - Criticized loans declined by $34,000,000 or 8% quarter over quarter [19] - Non-performing assets totaled $113,000,000, representing 61 basis points of total assets, up from 49 basis points as of March 31 [19] Company Strategy and Development Direction - The acquisition of Territorial Bancorp is seen as a strategic move to enter the important Hawaii market [4] - Strengthening the deposit franchise remains a key priority, with a focus on reducing broker deposits and improving the cost of funds [7] - The company expects loan growth at a high single-digit percentage rate for 2025, driven by improved frontline productivity and hiring [22] Management Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about asset quality, despite some uncertainties in the macroeconomic environment [51] - The company anticipates net interest income growth in the high single-digit percentage range for 2025, despite the negative impact of fewer Fed funds rate cuts [22] - The effective tax rate is expected to be approximately 14% in the third and fourth quarters due to changes in California state tax apportionment law [24] Other Important Information - The Board of Directors declared a quarterly common stock dividend of $0.14 per share [6] - The company plans to continue recognizing pretax acquisition accounting adjustments associated with the Territorial transaction on a quarterly basis [12] Q&A Session Summary Question: Fee income guidance for the second half of the year - Management highlighted positive drivers such as customer swap fee income growth and improved loan-related fee income [30] Question: Spot rate on deposits and assumptions for the outlook - The spot rate at June was 2.93%, with expectations for higher betas on deposit products during upcoming rate cuts [31][32] Question: Cost savings from the Territorial acquisition - Management indicated that there are still more integration and cost savings expected in the second half of the year, but specifics will be shared later [35] Question: Loan growth expectations and hiring impact - Management confirmed ongoing hiring of experienced bankers to drive loan production, with expectations for increased loan growth in the latter half of the year [47] Question: Asset quality and credit outlook - Management expressed cautious optimism regarding asset quality, noting a decline in criticized assets and manageable levels of problem loans [51] Question: One-time costs related to the acquisition - Management indicated there will be a couple million more in one-time costs in the third and fourth quarters [65] Question: Average yield on new loan production - The average yield on new production was approximately 6.76% [68]

Financial Performance - GAAP net loss for 2Q25 was $(27.9) million, or $(0.22) per diluted share[4], while net income excluding notable items was $24.5 million, or $0.19 per diluted share[4] - Net interest income before provision for credit losses increased by 17% QoQ to $117.53 million[64] - Noninterest income totaled $(23) million, including a net loss of $39 million from legacy securities AFS repositioning[48]; excluding notable items, noninterest income was $16 million, up 1% QoQ and 44% YoY[48] - GAAP noninterest expense was $109 million, including merger-related costs[52]; excluding notable items, noninterest expense was $92 million, up 13% QoQ[52] Balance Sheet & Capital - Total deposits reached $15.9 billion at 6/30/25, up 10% QoQ, largely due to the Territorial acquisition[5, 18] - Loans receivable totaled $14.4 billion at 6/30/25, up 8% QoQ, also largely reflecting the Territorial acquisition[5, 21] - Total capital ratio was 13.76% at 6/30/25[5] - Tangible common equity (TCE) ratio was 9.43% at 6/30/25[5] Asset Quality - Nonperforming assets (NPA) were $113 million, or 0.61% of total assets at 6/30/25[5] - Criticized loans decreased by 8% QoQ to 2.87% of total loans[5] - Net charge-offs (NCO) were $12 million in 2Q25, or 33bps of average loans, annualized[59] Strategic Initiatives - The acquisition of Territorial Bancorp Inc added $1.7 billion of stable, low-cost deposits and $1.0 billion of residential mortgage loans[5] - Repositioned $418 million of legacy investment securities available-for-sale (AFS) in June 2025, expected to contribute approximately $12 million to interest income annually[5, 36] Outlook - The company anticipates high single-digit % growth for end-of-period loans in 2025[60] - The company anticipates high single-digit % growth for net interest income in 2025[60] - The company anticipates upper-20s % growth for noninterest income (excluding notable items) in 2025[60]

Core Insights - Hope Bancorp reported revenue of $133.43 million for the quarter ended June 2025, marking a year-over-year increase of 14.1% [1] - The EPS for the same period was $0.19, down from $0.22 a year ago, indicating a decline [1] - The reported revenue exceeded the Zacks Consensus Estimate of $126.92 million by 5.13%, while the EPS fell short of the consensus estimate of $0.21 by 9.52% [1] Financial Metrics - Efficiency Ratio stood at 115.8%, significantly higher than the average estimate of 70.2% based on two analysts [4] - Net Interest Margin was reported at 2.7%, above the average estimate of 2.5% from two analysts [4] - Net charge-offs to average loans were 0.3%, compared to the average estimate of 0.1% [4] - Net Interest Income (before provision) was $117.53 million, exceeding the average estimate of $113.4 million [4] - Total noninterest income reached $15.9 million, surpassing the average estimate of $13.18 million [4] - Net gains on sales of SBA loans were $4 million, compared to the estimated $3.08 million [4] Stock Performance - Shares of Hope Bancorp have returned +8.4% over the past month, outperforming the Zacks S&P 500 composite's +5.9% change [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), suggesting potential for outperformance in the near term [3]

Core Insights - Value investing focuses on identifying stocks trading below their intrinsic value, allowing investors to benefit as market prices align with true company value over time [1] - Earnings yield, calculated as earnings per share divided by stock price, is a useful metric for identifying undervalued stocks, with a higher yield indicating potential undervaluation [2][4] - A screening criterion of an earnings yield greater than 10% is established, alongside other parameters like estimated EPS growth and average daily volume [6][7] Company Highlights - IAMGOLD Corporation (IAG) is a gold exploration and mining company with projected earnings growth of 44% and 40% for 2025 and 2026, respectively, and currently holds a Zacks Rank 1 [9] - Plains GP Holdings (PAGP) is involved in crude oil and refined products transportation, with earnings growth estimates of 206% and 24% for 2025 and 2026, respectively, also holding a Zacks Rank 1 [10][11] - Hope Bancorp (HOPE) provides commercial banking services, with earnings growth estimates of 12% and 40% for 2025 and 2026, and holds a Zacks Rank 1 [12] - CommScope Holding Company, Inc. (COMM) offers communication network infrastructure solutions, with an extraordinary earnings growth estimate of 3,167% for 2025 and 28% for 2026, holding a Zacks Rank 2 [13] - Harmony Biosciences Holdings Inc. (HRMY) focuses on therapies for rare neurological disorders, with earnings growth estimates of 22% and 32% for 2025 and 2026, and holds a Zacks Rank 2 [14]

Core Viewpoint - Hope Bancorp reported quarterly earnings of $0.19 per share, missing the Zacks Consensus Estimate of $0.21 per share, and showing a decrease from $0.22 per share a year ago, resulting in an earnings surprise of -9.52% [1][2] Financial Performance - The company posted revenues of $133.43 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 5.13%, compared to $116.93 million in the same quarter last year [2] - Over the last four quarters, Hope Bancorp has exceeded consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - Hope Bancorp shares have declined approximately 7.6% since the beginning of the year, while the S&P 500 has gained 7.2% [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), indicating expectations for outperformance in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.25 on revenues of $134.68 million, and for the current fiscal year, it is $0.95 on revenues of $519.89 million [7] - The outlook for the industry, particularly the Banks - West sector, is favorable, ranking in the top 28% of over 250 Zacks industries, which historically outperforms the bottom 50% by more than 2 to 1 [8]

[Company Overview and Highlights](index=1&type=section&id=Company%20Overview%20and%20Highlights) Hope Bancorp reported a net loss in Q2 2025 due to significant items, but saw growth in net interest income and expanded its market presence through acquisition [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Hope Bancorp recorded a $27.9 million net loss in Q2 2025, or $0.22 diluted EPS, driven by significant items, but adjusted net income was $24.5 million, or $0.19 diluted EPS Financial Performance Summary | Metric | Q2 2025 (GAAP) | Q2 2025 (Adjusted) | Q1 2025 (GAAP) | Q1 2025 (Adjusted) | | :--------------------- | :----------------------- | :------------------------------- | :----------------------- | :------------------------------- | | Net Income / (Loss) | $(27.9) million USD | $24.5 million USD | $21.1 million USD | $22.9 million USD | | Diluted EPS / (Loss) | $(0.22) | $0.19 | $0.17 | $0.19 | - Significant items totaled **$52.4 million** (after-tax), including net loss on securities sales, M&A-related expenses, and a one-time impact from California tax law changes[3](index=3&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Kevin S. Kim highlighted Q2 2025 as a milestone with the successful Territorial Bancorp acquisition, driving net interest income growth and net interest margin expansion - Completed the acquisition of Territorial Bancorp Inc., expanding operations into the Hawaii market[4](index=4&type=chunk) Key Performance Indicators | Metric | Q2 2025 QoQ Change | | :----------------- | :--------------------- | | Net Interest Income | Increased 17% | | Net Interest Margin | Expanded 15 bps | | Adjusted Net Income | Increased 7% | - Strategically sold a portion of the legacy investment securities portfolio, projected to increase annual interest income by approximately **$12 million** to enhance future profitability[5](index=5&type=chunk) [About Hope Bancorp, Inc.](index=6&type=section&id=About%20Hope%20Bancorp%2C%20Inc.) Hope Bancorp, Inc., the holding company for Bank of Hope, is the largest regional Korean-American bank in the U.S., with $18.55 billion in total assets as of June 30, 2025 - Total assets of **$18.55 billion** as of June 30, 2025[31](index=31&type=chunk) - Became the largest regional bank serving diverse multicultural customers across the U.S. mainland and Hawaii through the acquisition of Territorial Savings[31](index=31&type=chunk) - Operates **46** Bank of Hope full-service branches and **29** Territorial Savings branches, along with loan production offices across the U.S[31](index=31&type=chunk) [Operating Results for the 2025 Second Quarter](index=1&type=section&id=Operating%20Results%20for%20the%202025%20Second%20Quarter) Hope Bancorp's Q2 2025 operating results show significant growth in net interest income and margin, alongside impacts from acquisition-related expenses and tax law changes [Net interest income and net interest margin](index=1&type=section&id=Net%20interest%20income%20and%20net%20interest%20margin) Net interest income increased 17% to $117.5 million in Q2 2025, with net interest margin expanding 15 basis points to 2.69%, driven by loan growth and lower deposit costs Net Interest Income and Margin Trends | Metric | Q2 2025 | Q1 2025 | QoQ Change | | :----------------- | :------------- | :------------- | :------- | | Net Interest Income | $117.5 million USD | $100.8 million USD | Increased 17% | | Net Interest Margin | 2.69% | 2.54% | Expanded 15 bps | | Average Loan Growth | 7% | - | - | | Average Cost of Interest-Bearing Deposits | 3.77% | 4.14% | Decreased 37 bps | [Noninterest income](index=2&type=section&id=Noninterest%20income) Noninterest income was negative $23.0 million in Q2 2025 due to a $38.9 million net loss on securities sales, but adjusted noninterest income remained stable at $15.9 million Noninterest Income Breakdown | Metric | Q2 2025 | Q1 2025 | QoQ Change | | :--------------------- | :------------- | :------------- | :------- | | Noninterest Income (GAAP) | $(23.0) million USD | $15.7 million USD | N/A | | Net Loss on Securities Sales | $(38.9) million USD | $0 million USD | N/A | | Noninterest Income (Adjusted) | $15.9 million USD | $15.7 million USD | Increased | | Net Gains on SBA Loan Sales | $4.0 million USD | $3.1 million USD | Increased 28% | [Noninterest expense](index=2&type=section&id=Noninterest%20expense) Total noninterest expense was $109.5 million in Q2 2025, with adjusted expenses rising to $92.2 million due to the Territorial acquisition, while the adjusted efficiency ratio improved to 69.1% Noninterest Expense and Efficiency | Metric | Q2 2025 (GAAP) | Q2 2025 (Adjusted) | Q1 2025 (GAAP) | Q1 2025 (Adjusted) | | :--------------------- | :----------------------- | :------------------------------- | :----------------------- | :------------------------------- | | Noninterest Expense | $109.5 million USD | $92.2 million USD | $83.9 million USD | $81.3 million USD | | Efficiency Ratio (Adjusted) | 69.1% | - | 69.8% | - | - The quarter-over-quarter increase in noninterest expense primarily reflects the integration of Territorial's operations[10](index=10&type=chunk) [Income tax provision (benefit) and tax rate](index=2&type=section&id=Income%20tax%20provision%20(benefit)%20and%20tax%20rate) Hope Bancorp recognized a $2.0 million income tax benefit in Q2 2025 due to GAAP net loss, with the effective tax rate (adjusted) at 20.1%, down from 24.2% in Q1 Income Tax and Effective Tax Rate | Metric | Q2 2025 (GAAP) | Q2 2025 (Adjusted) | Q1 2025 (GAAP) | | :--------------------- | :----------------------- | :------------------------------- | :----------------------- | | Income Tax Provision (Benefit) | $(2.0) million USD | - | $6.7 million USD | | Effective Tax Rate | 6.7% | 20.1% | 24.2% | - California tax law changes resulted in a **$4.9 million** deferred tax asset revaluation, expected to reduce the company's ongoing effective tax rate by approximately **1%**[10](index=10&type=chunk) [Balance Sheet Summary](index=2&type=section&id=Balance%20Sheet%20Summary) Hope Bancorp's balance sheet as of June 30, 2025, reflects growth in loans and deposits driven by the Territorial acquisition, alongside strategic adjustments in investment securities and reduced borrowings [Cash and investment securities](index=2&type=section&id=Cash%20and%20investment%20securities) Cash and due from banks decreased to $689.7 million, while investment securities increased 9% to $2.27 billion as of June 30, 2025, following the Territorial acquisition and portfolio reallocation Cash and Investment Securities Overview | Metric | June 30, 2025 | March 31, 2025 | QoQ Change | | :----------------- | :------------- | :------------- | :------- | | Cash and Due from Banks | $689.7 million USD | $733.5 million USD | Decreased (6)% | | Investment Securities | $2.27 billion USD | $2.09 billion USD | Increased 9% | - Sold **$417.9 million** of legacy AFS investment securities with an average weighted book yield of **2.33%**, and reinvested proceeds into higher-yielding securities with an average current market yield of **5.42%**[13](index=13&type=chunk) [Loans](index=3&type=section&id=Loans) Total loans (excluding held for sale) grew 8% to $14.43 billion as of June 30, 2025, with the Territorial acquisition contributing $1.07 billion and residential mortgage loans increasing significantly Loan Growth and Composition | Metric | June 30, 2025 | March 31, 2025 | QoQ Change | | :--------------------- | :------------- | :------------- | :------- | | Total Loans (excluding loans held for sale) | $14.43 billion USD | $13.34 billion USD | Increased 8% | | Territorial Acquisition Loan Contribution | $1.07 billion USD | - | - | | Residential Mortgage and Other Loans | Increased 96% | - | - | | Residential Mortgage Loan % of Total | 16% | 9% | Increased 7% | Loan Portfolio Composition (June 30, 2025) | Loan Type | Balance (in thousands USD) | Percentage | | :----------------- | :-------------- | :--- | | Commercial Real Estate (CRE) Loans | $8,385,764 | 58.0% | | Commercial and Industrial (C&I) Loans | $3,725,295 | 25.8% | | Residential Mortgage and Other | $2,323,728 | 16.1% | | **Total Loans** | **$14,434,787** | **99.9%** | [Deposits](index=3&type=section&id=Deposits) Total deposits increased 10% to $15.94 billion as of June 30, 2025, largely due to the Territorial acquisition, while brokered deposits decreased 19% to $797.1 million, representing 5% of total deposits Deposit Trends and Composition | Metric | June 30, 2025 | March 31, 2025 | QoQ Change | | :----------------- | :------------- | :------------- | :------- | | Total Deposits | $15.94 billion USD | $14.49 billion USD | Increased 10% | | Territorial Acquisition Deposit Contribution | $1.67 billion USD | - | - | | Brokered Deposits | $797.1 million USD | $980.3 million USD | Decreased 19% | | Brokered Deposits % of Total Deposits | 5% | 7% | Decreased 2% | Deposit Portfolio Composition (June 30, 2025) | Deposit Type | Balance (in thousands USD) | Percentage | | :--------------------- | :-------------- | :--- | | Noninterest-Bearing Demand Deposits | $3,485,502 | 21.9% | | Money Market, Interest-Bearing Demand and Savings Deposits | $6,102,999 | 38.3% | | Time Deposits | $6,354,854 | 39.8% | | **Total Deposits** | **$15,943,355** | **100.0%** | [Borrowings](index=3&type=section&id=Borrowings) FHLB and FRB borrowings decreased significantly to $29.8 million as of June 30, 2025, from $100.0 million in Q1, reflecting repayment of maturing obligations and post-acquisition adjustments Borrowings Overview | Metric | June 30, 2025 | March 31, 2025 | QoQ Change | | :--------------------- | :------------- | :------------- | :------- | | FHLB and FRB Borrowings | $29.8 million USD | $100.0 million USD | Decreased (70)% | [Credit Quality and Allowance for Credit Losses](index=3&type=section&id=Credit%20Quality%20and%20Allowance%20for%20Credit%20Losses) Hope Bancorp's credit quality saw a reduction in criticized loans but an increase in nonperforming assets due to a specific CRE loan, with net charge-offs rising and allowance coverage slightly decreasing post-acquisition [Criticized loans](index=3&type=section&id=Criticized%20loans) Criticized loans decreased by $34.0 million (8%) to $414.7 million as of June 30, 2025, with special mention loans declining 26% quarter-over-quarter, improving the criticized loans to total loans ratio to 2.87% Criticized Loans Performance | Metric | June 30, 2025 | March 31, 2025 | QoQ Change | | :----------------- | :------------- | :------------- | :------- | | Criticized Loans | $414.7 million USD | $448.7 million USD | Decreased (8)% | | Special Mention Loans | Decreased 26% | - | - | | Criticized Loans / Total Loans Ratio | 2.87% | 3.36% | Improved | [Nonperforming assets](index=4&type=section&id=Nonperforming%20assets) Nonperforming assets increased to $112.9 million, or 0.61% of total assets, as of June 30, 2025, primarily due to the migration of one commercial real estate loan Nonperforming Assets Overview | Metric | June 30, 2025 | March 31, 2025 | QoQ Change | | :----------------- | :------------- | :------------- | :------- | | Nonperforming Assets | $112.9 million USD | $83.9 million USD | Increased | | Nonperforming Assets / Total Assets Ratio | 0.61% | 0.49% | Increased | - The increase in nonperforming assets was primarily driven by the migration of one commercial real estate loan[19](index=19&type=chunk) [Net charge offs](index=4&type=section&id=Net%20charge%20offs) Net charge-offs rose to $12.0 million in Q2 2025, representing an annualized 0.33% of average loans, up from $8.3 million (0.25% annualized) in the prior quarter Net Charge-offs Performance | Metric | Q2 2025 | Q1 2025 | QoQ Change | | :--------------------- | :------------- | :------------- | :------- | | Net Charge-offs | $12.0 million USD | $8.3 million USD | Increased | | Net Charge-offs / Average Loans (Annualized) | 0.33% | 0.25% | Increased | [Allowance for credit losses](index=4&type=section&id=Allowance%20for%20credit%20losses) Total allowance for credit losses was $149.5 million as of June 30, 2025, with the coverage ratio decreasing to 1.04% of total loans, reflecting the impact of the Territorial acquisition Allowance for Credit Losses | Metric | June 30, 2025 | March 31, 2025 | QoQ Change | | :--------------------- | :------------- | :------------- | :------- | | Allowance for Credit Losses | $149.5 million USD | $147.4 million USD | Increased | | Allowance Coverage / Loans Receivable | 1.04% | 1.11% | Decreased | - The decrease in allowance coverage primarily reflects the impact of high-quality loans acquired through the Territorial acquisition[21](index=21&type=chunk) [Provision for credit losses](index=4&type=section&id=Provision%20for%20credit%20losses) Provision for credit losses was $15.0 million in Q2 2025, including $4.5 million in M&A-related provisions, with the adjusted provision rising to $10.5 million due to increased net charge-offs and unfunded commitments Provision for Credit Losses | Metric | Q2 2025 (GAAP) | Q2 2025 (Adjusted) | Q1 2025 (GAAP) | | :--------------------- | :----------------------- | :------------------------------- | :----------------------- | | Provision for Credit Losses | $15.0 million USD | $10.5 million USD | $4.8 million USD | | M&A-Related Provision Expense | $4.5 million USD | - | - | - The increase in adjusted provision primarily reflects higher net charge-offs and an increase in the reserve for unfunded loan commitments[23](index=23&type=chunk) [Capital](index=5&type=section&id=Capital) Hope Bancorp and Bank of Hope maintained capital ratios above all 'well-capitalized' regulatory requirements as of June 30, 2025, despite some quarter-over-quarter adjustments due to the Territorial acquisition [Capital Ratios](index=5&type=section&id=Capital%20Ratios) Both the company and the bank exceeded all 'well-capitalized' regulatory capital requirements as of June 30, 2025, with quarter-over-quarter changes reflecting the Territorial acquisition Hope Bancorp Capital Ratios (June 30, 2025) | Capital Ratio | June 30, 2025 | March 31, 2025 | 'Well-Capitalized' Minimum Requirement | | :--------------------- | :------------- | :------------- | :------------------- | | Common Equity Tier 1 Capital Ratio | 12.06% | 13.28% | 6.50% | | Tier 1 Capital Ratio | 12.76% | 14.02% | 8.00% | | Total Capital Ratio | 13.76% | 15.06% | 10.00% | | Leverage Ratio | 10.57% | 11.92% | 5.00% | - All capital ratios exceeded regulatory requirements, meeting 'well-capitalized' thresholds[25](index=25&type=chunk) [Stockholders' Equity and Tangible Common Equity](index=5&type=section&id=Stockholders%27%20Equity%20and%20Tangible%20Common%20Equity) Total stockholders' equity increased 3% to $2.22 billion as of June 30, 2025, while tangible common equity (TCE) per share and TCE ratio decreased, reflecting the Territorial acquisition Stockholders' Equity and TCE | Metric | June 30, 2025 | March 31, 2025 | QoQ Change | | :--------------------- | :------------- | :------------- | :------- | | Total Stockholders' Equity | $2.22 billion USD | $2.16 billion USD | Increased 3% | | TCE per Share | $13.26 | $13.99 | Decreased | | TCE Ratio | 9.43% | 10.20% | Decreased | - Issued **6,976,754** shares of common stock valued at **$73.3 million** for the Territorial acquisition[27](index=27&type=chunk) [Additional Information](index=5&type=section&id=Additional%20Information) This section provides details on the upcoming investor conference call, clarifies the use of non-GAAP financial metrics, and outlines forward-looking statements and contact information [Investor Conference Call](index=5&type=section&id=Investor%20Conference%20Call) Hope Bancorp announced an investor conference call on July 22, 2025, to review Q2 2025 unaudited financial results, accessible via phone or the company's investor relations website - The investor conference call is scheduled for July 22, 2025, at **9:30 AM Pacific Time / 12:30 PM Eastern Time**[28](index=28&type=chunk) - Conference presentation and webcast are available on the Hope Bancorp Investor Relations website[28](index=28&type=chunk) [Non-GAAP Financial Metrics](index=6&type=section&id=Non-GAAP%20Financial%20Metrics) This release includes non-GAAP financial metrics such as adjusted net income, EPS, noninterest income/expense, and TCE ratios, which management believes provide meaningful supplemental information, with GAAP reconciliations provided - Various non-GAAP financial metrics are used, including adjusted net income, EPS, noninterest income, noninterest expense, provision for credit losses, efficiency ratio, effective tax rate, PPNR, ROA, ROE, ROTCE, TCE per share, and TCE ratio[30](index=30&type=chunk) - Management believes these non-GAAP metrics provide meaningful supplemental information, and quantitative reconciliations to GAAP measures are provided in the accompanying financial information[30](index=30&type=chunk) [Forward-Looking Statements](index=7&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially, including integration challenges, economic conditions, and regulatory risks - Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations[33](index=33&type=chunk) - Key risks include difficulties integrating Territorial Bancorp, transaction costs, deposit attrition, operating costs, customer retention, deteriorating economic conditions, interest rate risk, liquidity risk, credit loss risk, regulatory risk, and natural disasters[33](index=33&type=chunk) [Contacts](index=7&type=section&id=Contacts) Contact information for investor relations is provided, including Julianna Balicka (EVP & CFO) and Angie Yang (SVP, Director of Investor Relations), with their respective phone numbers and email addresses - Investor Relations contacts: Julianna Balicka (EVP & Chief Financial Officer) and Angie Yang (SVP, Director of Investor Relations)[34](index=34&type=chunk)