• Net Income: $21.1 million or $0.17 per diluted common share; excluding notable items, $22.9 million or $0.19 per diluted common share.
• Net Interest Income: $101 million for Q1 2025, down 1% from Q4 2024.
• Net Interest Margin: Increased by 4 basis points to 2.54% from 2.50% in Q4 2024.
• Non-Interest Income: $15.7 million for Q1 2025, compared to $15.9 million in Q4 2024.
• Non-Interest Expense: $84 million in Q1 2025; excluding notable items, $81 million, up 6% quarter-over-quarter.
• Total Deposits: $14.5 billion as of March 31, 2025, an increase of 1% from the prior quarter.
• Loans Receivable: $13.3 billion as of March 31, 2025, down 2% from year-end 2024.
• Non-Performing Assets: Decreased 8% quarter-over-quarter, representing 49 basis points of total assets.
• Net Charge-Offs: $8 million, annualized 25 basis points of average loans for Q1 2025.
• Provision for Credit Losses: $4.8 million in Q1 2025, down sequentially quarter-over-quarter.
• Allowance Coverage of Loans: 1.11% as of March 31, 2025, unchanged quarter-over-quarter.
• Territorial Bancorp Merger: Contributed approximately $1.7 billion of deposits and $1 billion of residential mortgage loans.
• Quarterly Dividend: $0.14 per share, payable on May 16, 2025.

• Warning! GuruFocus has detected 2 Warning Sign with HOPE.

Release Date: April 22, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Hope Bancorp Inc (NASDAQ:HOPE) reported a net income of $21.1 million for the first quarter of 2025, with an adjusted net income of $22.9 million excluding notable items.
• The company completed its merger with Territorial Bancorp, adding approximately $1.7 billion in stable low-cost deposits and $1 billion in residential mortgage loans with pristine asset quality.
• Hope Bancorp Inc (NASDAQ:HOPE) maintained strong capital ratios, providing a cushion to navigate macroeconomic volatility and support balance sheet growth.
• The company declared a quarterly common stock dividend of $0.14 per share, reflecting a commitment to returning value to shareholders.
• Loan production increased by 11% year-over-year, with a focus on strengthening deposit mix and reducing broker deposits to less than 7% of total deposits.

Negative Points

• Net interest income decreased by 1% from the previous quarter, impacted by federal funds rate cuts and lower average loan balances.
• Non-interest expense increased by 6% quarter-over-quarter due to typical first-quarter increases in salary and employee benefits.
• Loans receivable decreased by 2% from the end of 2024, with declines in commercial and industrial loans and commercial real estate loans.
• The company faces aggressive market pricing competition and spread compression, impacting net loan growth.
• Hope Bancorp Inc (NASDAQ:HOPE) anticipates one-time pre-tax acquisition-related expenses of approximately $18 million in the second quarter of 2025 due to the Territorial merger.

Q & A Highlights

Q: How would the high single-digit net interest income (NII) growth outlook change if there are fewer than the three rate cuts assumed, and what is the annual impact to NII for each 25 basis points rate cut? A: If there are fewer rate cuts than assumed, the impact on 2025 NII will be relatively neutral. While rate cuts allow for reduced deposit costs, they also compress variable linked loan yields. Overall, the effects tend to offset each other, resulting in a modest downward impact. - Julianna Balicka, CFO

Q: Can you provide details on the loan verticals expected to see moderate organic growth and insights into client conversations that support maintaining growth guidance? A: We are seeing positive momentum in our pipelines, particularly in the Korean subsidiary sectors and specialized commercial lending verticals such as healthcare, project finance, and structured finance. Recent team expansions in these areas are contributing to pipeline growth. - Julianna Balicka, CFO

Q: What are the specific segments where we might see loan growth in the second half of the year? A: Loan growth is expected in the Korean subsidiary sectors and specialized C&I teams, including healthcare, project finance, and structured finance. These areas are showing good momentum in our pipelines. - Julianna Balicka, CFO

Q: Can you remind us of the specific net interest margin (NIM) impact of each 25 basis points rate cut, all else being equal? A: A 25 basis points rate cut generally offsets itself. Loan yields compress, but deposit costs cannot be reduced as much, resulting in a slight downward shift. The exact impact depends on execution, so no precise basis point change is provided. - Julianna Balicka, CFO

Q: How is the asset quality, and are there any specific points of stress or areas being closely monitored? A: Asset quality remains stable. We are proactively monitoring the portfolio, especially in light of tariff uncertainties. Borrowers are mitigating potential impacts by diversifying supply chains, and overall, asset quality is healthy and stable. - Peter Koh, COO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.