Hope Bancorp(US:HOPE)2025-07-22 17:32Financial 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]