Earnings call transcript: Hope Bancorp Q2 2025 sees strategic gains and stock rise

Hope Bancorp (HOPE), a $1.34 billion market cap financial institution, revealed strategic advancements and financial resilience in its Q2 2025 earnings call. The company reported a net income of $24.5 million, excluding notable items, marking a 7% rise from the previous quarter. Despite one-time items resulting in a net loss of $27.9 million, Hope Bancorp’s stock rose 0.87% to $10.42 in aftermarket trading.

According to InvestingPro, Hope Bancorp shows several promising indicators, including a high shareholder yield and a 14-year track record of consistent dividend payments. InvestingPro subscribers have access to 6 additional key insights about the company’s performance and outlook.

Key Takeaways

• Hope Bancorp’s net income rose 7% quarter-over-quarter.
• The company completed the acquisition of Territorial Bancorp.
• Stock price increased by 0.87% in aftermarket trading.
• Net interest margin improved by 15 basis points to 2.69%.
• Fee income growth expectations increased to high twenties percentage range for 2025.

Company Performance

Hope Bancorp demonstrated robust performance in Q2 2025, achieving a 7% increase in net income from the previous quarter, driven by strategic acquisitions and operational efficiencies. The acquisition of Territorial Bancorp and repositioning of its securities portfolio have strengthened Hope Bancorp’s market position, particularly in Hawaii. The company’s focus on hiring experienced bankers is expected to further enhance its competitive edge. The bank currently offers an attractive 5.35% dividend yield, reflecting its commitment to shareholder returns.

Financial Highlights

• Revenue: Not specified in the provided data.
• Earnings per share: $0.19, reflecting a stable performance.
• Net interest margin: Increased by 15 basis points to 2.69%.
• Pretax pre-provision net revenue: $41.2 million, up 17% quarter-over-quarter.
• Efficiency ratio: Improved to 69.1%, excluding notable items.

Market Reaction

Hope Bancorp’s stock price increased by 0.87% to $10.42 in aftermarket trading. This rise reflects investor confidence in the company’s strategic initiatives and financial stability. With a beta of 0.92, the stock demonstrates lower volatility compared to the broader market. The stock remains within its 52-week range, with a high of $14.54 and a low of $8.82, suggesting room for further growth as the company continues to execute its strategic plans.

InvestingPro’s Fair Value analysis indicates that Hope Bancorp is currently trading near its Fair Value. Discover comprehensive valuation insights and detailed financial analysis with an InvestingPro subscription.

Outlook & Guidance

Looking ahead, Hope Bancorp anticipates high single-digit loan growth and net interest income growth for 2025. The company has also revised its fee income growth expectations to the high twenties percentage range, indicating a positive outlook for revenue diversification. Analysts project 16% revenue growth for FY2025, supporting the company’s positive trajectory. The effective tax rate is expected to be around 14% in the coming quarters, providing further clarity for investors.

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Executive Commentary

Kevin Kim, CEO of Hope Bancorp, highlighted the company’s strategic focus, stating, "We continue to expect 2025 loan growth at a high single digit percentage rate." He also emphasized the increased fee income growth expectations, saying, "We are increasing our year over year fee income growth expectations to be in the high twenties percentage range for 2025."

Risks and Challenges

• Integration of Territorial Bancorp: Ensuring smooth integration and maintaining customer experience.
• Market volatility: Potential fluctuations in interest rates affecting net interest margins.
• Regulatory changes: Adapting to evolving financial regulations.
• Economic conditions: Impact of macroeconomic factors on loan growth and credit quality.

Q&A

During the Q&A session, analysts inquired about potential stock buybacks, given Hope Bancorp’s strong capital levels. The management expressed cautious optimism about credit quality and clarified their net interest income guidance. Additionally, the company addressed tax rate expectations for 2026, providing further insights into its financial strategy.

Full transcript - Hope Bancorp Inc (HOPE) Q2 2025:

Drew, Conference Operator: Please note this event is being recorded. I would now like to turn the conference over to Angie Yang, Director of Investor Relations. Please go ahead.

Angie Yang, Director of Investor Relations, Hope Bancorp: Thank you, Drew. Good morning, everyone, and thank you for joining us for The Hope Bancorp twenty twenty five Second Quarter Investor Conference Call. As usual, we will be using a slide presentation to accompany our discussion this morning, which is available in the Presentations page of our Investor Relations website. Beginning on Slide two, let me start with a brief statement regarding forward looking remarks. The call today contains forward looking projections regarding the future financial performance of the company and future events.

Forward looking statements are not guarantees of future performance. Actual outcomes and results may differ materially. Hope Bancorp assumes no obligation to revise any forward looking projections that may be made on today’s call. In addition, some of the information referenced on this call today are non GAAP financial measures. For a more detailed description of the risk factors and a reconciliation of GAAP to non GAAP financial measures, please refer to the company’s filings with the SEC as well as the Safe Harbor statements in our press release issued this morning.

Now we have allotted one hour for this call. Presenting from the management side today will be Kevin Kim, Hope Bancorp’s Chairman, President and CEO and Juliana Beliska, our Chief Financial Officer. Peter Koh, our Chief Operating Officer, is also here with us as usual and will be available for the Q and A session. With that, let me turn the call over to Kevin Kim. Kevin?

Kevin Kim, Chairman, President and CEO, Hope Bancorp: Thank you, Angie. Good morning, everyone, and thank you for joining us today. Let’s begin on Slide three with a brief overview of the quarter. The 2025 was a milestone quarter for Hope Bancorp as we completed the acquisition of Territorial Bancorp entering the strategically important market of Hawaii. We are excited about the opportunities that this presents.

We also repositioned a portion of our legacy securities portfolio to enhance our interest income. Accordingly, we believe net income excluding notable items is more indicative of our fundamental performance this quarter. Net income for the twenty twenty five second quarter, excluding notable items, totaled $24,500,000 up 7% from $22,900,000 excluding notable items in the preceding first quarter. Earnings per diluted share, excluding notable items, $0.19 for both quarters as we issued 9,000,000 shares with the territorial transaction. As a result of the one time loss incurred from selling lower yielding legacy securities and from merger related items, together with a one time impact from a change in California’s state tax apportionment law, we reported a net loss of $27,900,000 for the second quarter.

Pretax pre provision net revenue excluding notable items grew to $41,200,000 in the second quarter of twenty twenty five, up 17% from $35,200,000 in the twenty twenty five first quarter. This reflected the impact of the territorial acquisition, legacy loan growth, improvement in the cost of deposits and core fee income growth. Moving on to slide four, all our capital ratios remain well above the requirements for well capitalized financial institutions after the close of the territorial acquisition. Our strong capital levels and ample liquidity provide us a healthy cushion with which to navigate various macroeconomic scenarios and support prudent balance sheet growth. Our Board of Directors declared a quarterly common stock dividend of $0.14 per share payable on August 15 to stockholders of record as of 08/01/2025.

Continuing to Slide five, strengthening our deposit franchise remains a key priority. At 06/30/2025, our total deposits with the completion of the Territorial acquisition grew to $15,900,000,000 an increase of 10% from the end of the prior quarter. The addition of territorial’s low cost deposits drove a substantial improvement in our cost of deposits. In addition, the ongoing maturity and renewal of CDs to lower rates will contribute to the improvement in the cost of funds. Our average cost of interest bearing deposits declined 37 basis points quarter over quarter and our average cost of total deposits decreased by 22 basis points quarter over quarter.

Similar to past quarters, we continue to reduce our broker deposits exposure, which decreased by $183,000,000 or 19% quarter over quarter. Overall, the broker deposits ratio declined to 5% of total deposits at 06/30/2025, down from 7% as of 03/31/2025 and nine percent as of 06/30/2024. Moving on to Slide six. At 06/30/2025, 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 as well as strengthening organic loan production. Organic loan production increased 57% from the first quarter level with a well diversified mix of originations across all our areas of lending.

Stronger production has translated into modest net growth in our legacy portfolio. Similar to past quarters, we saw robust net growth from Bank of Hope’s residential mortgage team. In addition, commercial real estate loans were up slightly quarter over quarter. Late in the quarter, we experienced some short term pay downs in certain commercial lines of credit and those balances have largely rebuilt immediately after the quarter end. Overall, with the addition of Territorial, our loan portfolio diversification has improved notably.

Residential mortgage and other loans represented 16% of our total loans as of 06/30/2025, up from 9% at 03/31/2025. On Slides seven and eight, we provide more details on our commercial real estate loans, which are well diversified by property type and granular in size. The loan to values remain low with a weighted average of approximately 46 at 06/30/2025 and the profile of our commercial real estate portfolio has not changed meaningfully. Asset quality remains stable. With that, I will ask Juliana to provide additional details on our financial performance for the second quarter.

Juliana?

Juliana Beliska, Chief Financial Officer, Hope Bancorp: Thank you, Kevin, and good morning, everyone. Before I begin my remarks, let me just make a quick clarification to an earlier comment. We issued 7,000,000 shares with the Territorial Bancorp transaction. And now beginning on slide nine. Our net interest income totaled $118,000,000 for the second quarter of twenty twenty five, an increase of 17% from the prior quarter.

This reflects the positive impact of the territorial acquisition and organic loan growth as well as an expansion in our net interest margin. On the bottom left quadrant of this slide, you can see the twenty twenty five second quarter pretax acquisition accounting adjustments associated with the territorial transaction. We will continue to recognize such adjustments on a quarterly basis through the amortization periods, as noted in the table. Accretion income from territorial loans was $4,000,000 in the second quarter. Accretion income is expected to become a recurring stable component of our interest income due to the long dated nature of territorial loans.

The amortization period of this portfolio is currently estimated to be twelve years. I will point out that the prepayment rate on this portfolio is slower than what was initially estimated at merger close in part due to change forward interest rate curve expectations. For 2025, we are now expecting to recognize approximately $12,000,000 of loan accretion income at approximately $4,000,000 per quarter compared with $14,000,000 anticipated initially for 2025. In June, we sold a portion of our legacy investment securities available for sale with a fair value of $418,000,000 and an aggregate weighted average book yield of 2.33%. The net proceeds from the sale were redeployed to purchase higher yielding securities with an aggregate average market yield of 5.42% at the time of purchase.

All else equal, the impact of this repositioning is expected to contribute approximately $12,000,000 per year to interest income. Overall, our net interest margin increased by 15 basis points quarter over quarter to 2.69 for the second quarter of twenty twenty five. On Slide 10, we show you the quarterly trends in our average loan and deposit balances and our weighted average yields and costs. On to Slide 11. Let’s look at our noninterest income.

Included in noninterest income is a $39,000,000 net loss on the investment securities repositioning that I just discussed, which we consider a notable item. Excluding notable items, the trajectory in our noninterest income has been a highlight over the last year. Second quarter twenty twenty five non interest income of $15,900,000 excluding the notable loss, was up 44% year over year. Service fees on deposit accounts have continued to grow quarter over quarter. Swap fee income increased year over year by $1,000,000 and year over year excuse me, customer swap fee income increased quarter over quarter by $1,000,000 and year over year by $1,600,000 reflecting improved customer demand.

I will also note that first quarter twenty twenty five other income included a favorable valuation mark of $1,700,000 related to the sale of non SBA loans and this did not recur in the second quarter. In the second quarter, we sold $67,000,000 of SBA loans and recognized net gains on sale of $4,000,000 This compares with sales of $50,000,000 in the first quarter and $3,100,000 of net gains on sale. Some sales that were initially planned for the first quarter moved into the second quarter, so we look at this result on a first half basis in aggregate. Moving on to non interest expense on slide 12. Our noninterest expense totaled $109,500,000 in the second quarter, including notable items, which largely comprised onetime merger related costs.

Excluding notable items, noninterest expense was $92,000,000 in the twenty twenty five second quarter, which compared with $81,000,000 in the first quarter, also excluding notable items. The quarter over quarter increase generally reflected the addition of the territorial operations to our organization. Our efficiency ratio, excluding notable items, improved quarter over quarter to 69.1% compared with 69.8% for the first quarter of twenty twenty five. I will also mention a notable tax item this quarter. On 06/27/2025, California state tax apportionment law changed.

Consequently, the one time remeasurement of our deferred tax asset cost us $4,900,000 this quarter, which we include in notable items. On an ongoing basis, this tax law change will lower our company’s effective tax rate by approximately 1%. Now moving on to Slide 13. I will review our asset quality. Our allowance coverage of loans was 1.04% as of 06/30/2025, compared with 1.11% as of March 31.

The change in the coverage ratio primarily reflected the addition of the loans acquired from Territorial, which have a lower reserve requirement due to the lower credit risk profile of residential mortgage loans. Criticized loans declined by $34,000,000 or 8% quarter over quarter to $415,000,000 at 06/30/2025. Within that, mention loans decreased by $47,000,000 or 26%. As a percentage of total loans, our criticized loan ratio was 2.87% at June 30, down from 3.36 at 03/31/2025. Non performing assets as of June 30 totaled $113,000,000 representing 61 basis points of total assets, up from 49 basis points of assets as of March 31.

This fluctuation is largely driven by one commercial real estate loan, which is well secured by collateral property in a prime location. Net charge offs totaled $12,000,000 or 33 basis points of average loans for the second quarter on an annualized basis compared with $8,000,000 or annualized 25 basis points of average loans in the first quarter. The twenty twenty five second quarter provision for credit losses was $15,000,000 and included merger related provision for credit losses of $4,500,000 comprising $3,900,000 of day one provision for territorial loans at acquisition close and $600,000 net write off related to the exit of Hope’s credit card portfolio. These items we consider as notable. With the acquisition, Hope is adopting Territorial’s white label credit card program.

Excluding notable items, the second quarter provision for credit losses of $10,500,000 compared with $5,000,000 in the first quarter, reflecting second quarter net charge offs as well as the quarter over quarter increase in the allowance for unfunded loan commitments. With that, let me turn the call back to Kevin.

Kevin Kim, Chairman, President and CEO, Hope Bancorp: Thank you, Juliana. Moving on to the outlook on Slide 14. We continue to expect 2025 loan growth at a high single digit percentage rate. Drivers in the second half of the year include continued improved frontline productivity, building on trends from the second quarter, as well as the impact of frontline hiring that we are continuing to make. In our outlook, we customarily use the forward interest rate curve, which currently assumes Fed funds target rate cuts in October and December.

A quarter ago, cuts were expected in June, September, and December. All else equal, higher for longer interest rates negatively impact our net interest income. Accordingly, in our outlook, we continue to expect net interest income growth in the high single digit percentage range for 2025. The negative impact of fewer Fed funds rate cuts on our net interest income and the updated slightly lower amount of loan accretion income expected to be recognized in 2025 will be offset by the incremental increase in interest income from the legacy investment portfolio repositioning that we executed in June. We are increasing our year over year fee income growth expectations to be in the high twenties percentage range for 2025 based on the year to date momentum across various key business lines.

This excludes notable items. Our outlook for non interest expenses, excluding notable items, is unchanged at low double digit percentage growth year over year. Lastly, we anticipate an effective tax rate of approximately 14 in both the third quarter and the fourth quarter. This reflects the California state tax apportionment law change and the impact and timing of the tax credit investments we are making. With that, Drew, please open up the call for questions.

Drew, Conference Operator: Yes, sir. We will now begin the question and answer session. The first question comes from Matthew Clark with Piper Sandler. Please go ahead.

Matthew Clark, Analyst, Piper Sandler: Hey, good morning.

Kevin Kim, Chairman, President and CEO, Hope Bancorp: Good morning.

Matthew Clark, Analyst, Piper Sandler: On fee income guide, I think it looks like you’re on pace to do roughly 63,000,000, for the year. Sorry. I’m getting some feedback. 63,000,000 for the year. I guess I know it sounds like SBA was a little heavy with with the delay in in sales in February, but anything else going on in the second half within fee income that we should think about?

Juliana Beliska, Chief Financial Officer, Hope Bancorp: Yeah. I think for second half fee income hi, Matthew. The SPA basically, it’s a question of timing. You take a look at one first quarter and second quarter and average it out, right? But for the second half of the year, things that we can think about that are positive drivers, as we pointed out, customer swap fee income growth has been a real highlight vis a vis year ago levels.

As a company, we’ve made a concentrated effort towards promoting that product and underwriting CRE loans with a customer swap in place as opposed to the traditional fixed rate loans. So that is continuing to drive fee income growth. And also as our loan growth momentum continues and production momentum continues to improve, we are looking at positive trends in other loan related fee income origination fees, unused commitment fees, a range of fees, the general that general bucket.

Matthew Clark, Analyst, Piper Sandler: Okay. Okay. And then shifting to the margin, I didn’t see a spot rate in your deck or in the release. But if you had the spot rate on deposits at the June and what you’re assuming within your outlook in terms of a cumulative data on deposits through the cycle?

Juliana Beliska, Chief Financial Officer, Hope Bancorp: The spot rate at the June was 2.93%. And that’s down, by the way, quarter to date by midpoint in July as well. So it’s continuing to improve. In terms of the full beta that we’re assuming for the cycle, Given the fact that rate cuts have delayed themselves towards October and December, we don’t really there’s not much more beta to be had this year. So there isn’t any change to beta expectations vis a vis last quarter, but I will share that for the coming cut when that happens.

We’re planning on executing betas at a higher pace than we have in initial cuts, so 100% or better at this deposit product, obviously. And then the impact of CDs changes the total deposit beta calculation, as you know, since that’s timing based.

Matthew Clark, Analyst, Piper Sandler: Yep. Yep. Okay. And then can you just remind us what percent of your loans are are truly floating that, you know, reset with each fed cut, you know, with, you know, territorial now on board?

Juliana Beliska, Chief Financial Officer, Hope Bancorp: About 42% of our loans is truly floating.

Matthew Clark, Analyst, Piper Sandler: Okay. Got it. And then do you have, how much in the way of cost saves do you have left for territorial so we can consider that going forward?

Juliana Beliska, Chief Financial Officer, Hope Bancorp: In the territorial franchise, we are very delighted to welcome the territorial team members into the Bank of Hope family, and we have been focusing on strengthening those operations. As you well know, through other M and A or generally in M and A, the upfront cost saves are executed in the beginning, which generally relate to corporate administrative cost cuts. And as we have said in the past, we plan to focus on maintaining the continuity of the customer experience. So right now, I will say that there is still more integration and cost fee coming in the second half of the year. But as far as the magnitude, we will share that later in the year.

Matthew Clark, Analyst, Piper Sandler: Okay. I’ll step back. Thank you.

Drew, Conference Operator: Thank you. The next question comes from Gary Tenner with D. A. Davidson. Please go ahead.

Gary Tenner, Analyst, D.A. Davidson: Thanks. Good morning. A couple of my questions were already asked. But with the deal closed CET1 ratio over 12% and the stock below tangible book, any thoughts here on a buyback as the dust settles on the transaction?

Kevin Kim, Chairman, President and CEO, Hope Bancorp: Well, Gary, we have been carefully evaluating our capital efficiencies. And the securities repositioning in June was part of our capital deployment strategies, and we are continuing to assess additional opportunities, I think I can say that much.

Gary Tenner, Analyst, D.A. Davidson: Okay. Thanks. And then just in terms of the conversion timing for territorial, when is that going to occur?

Kevin Kim, Chairman, President and CEO, Hope Bancorp: Conversion meaning the system conversion? Or the Yes.

Gary Tenner, Analyst, D.A. Davidson: System conversion.

Kevin Kim, Chairman, President and CEO, Hope Bancorp: Yeah. That that is expected to be completed by the end of next year. We have tentatively decided to run a territorial system for the time being because their system is very close to the expiration of their contract, and we are very close to that.

Gary Tenner, Analyst, D.A. Davidson: Okay. So does that just push out the cost savings that you had talked about when the deal was announced? Think it was like 27% or so of territorial expenses that just pushed that out deeper into

Juliana Beliska, Chief Financial Officer, Hope Bancorp: necessarily. The core costs and the IT costs were not the biggest component of territorial’s cost base. If you look at territorial’s disclosures and their proxy statements, you will see that the largest component of cost savings from that franchise would come from the form of executive compensation.

Gary Tenner, Analyst, D.A. Davidson: Right. Okay. All right. Thank you.

Drew, Conference Operator: The next question comes from Kelly Motta with KBW. Please go ahead.

Kelly Motta, Analyst, KBW: Hey, good morning. Thanks for the question. I was hoping to circle back to your expectations for loan growth. On an organic basis, it was relatively modest this quarter, but you mentioned you’re making some frontline hires to help help drive the outlook ahead. I’m wondering if you could share a bit more as to what you’re doing on that front and kind of the cadence of that of their contributions as I know it can take a a bit of time in order for new hires to to add to net growth?

Thanks.

Kevin Kim, Chairman, President and CEO, Hope Bancorp: Yeah. We have been hiring very experienced, talented commercial and corporate bankers over the past several months and we are continuing to do that. And if you look at our loan production in the second quarter, we have a very meaningful increase from the first quarter. And I think based upon the pipeline that we have at the beginning of the third quarter, our loan production will continue to increase over the rest of the year. In our payoff trends, our payoff in the second quarter was not as high as it was in the first quarter, but still the payoffs and pay down trends remain at elevated levels.

And I think once this the payoffs and pay downs have been stabilized and normalized with the added origination volumes that we can expect from these new bankers, I think the loan growth expectation in the third and fourth quarter is pretty doable for us.

Kelly Motta, Analyst, KBW: Got it. That’s helpful. And then a second one from me on asset quality, you guys called out in your release the migration of a CRE credit. So per disclosure, it’s it’s a well secured and, in in a prime location. Just as as you think about, the overall credit picture and what you’re seeing, I’m wondering, you know, if there’s been any shift in in how you’re viewing asset quality of the portfolio relative to maybe a quarter ago when things were more uncertain with tariffs and just could just provide us with a bit more color as to how you’re feeling about credit and what you’re watching more carefully?

Thanks.

Peter Koh, Chief Operating Officer, Hope Bancorp: Sure. This is Peter. Yeah. We’re, you know, actively monitoring our portfolio. I think we’re feeling cautiously optimistic.

I think a lot of the high levels of uncertainty, although they’re still around and we’re definitely monitoring the situation, but we do remain cautiously optimistic. I think if you look at our just overall level of potential problem loans, which is really represented by our level of criticized assets, you saw some meaningful decline this quarter. So really, I think barring any unexpected volatilities in the macroeconomic environment, we are we do think that asset quality remains manageable and stable.

Kelly Motta, Analyst, KBW: Got it. I’ll step back. Thanks a lot.

Peter Koh, Chief Operating Officer, Hope Bancorp: Thank you.

Drew, Conference Operator: The next question comes from Tim Coffey with Janney. Please go ahead.

Tim Coffey, Analyst, Janney: Great. Good morning, everybody. Good morning. Yes. Kevin, I’m sorry, could you provide some commentary on the legacy borrowers in Hope Bancorp, the ones that are on the commercial side, more towards the retail aspect of those businesses.

How they did in the second quarter? Because I think at the beginning of the quarter, there might have been a lot of uncertainty around it, but it seems like, that uncertainty started to evaporate by the end of the quarter.

Peter Koh, Chief Operating Officer, Hope Bancorp: Actually, this Peter. I can probably answer that. I think just level of uncertainty was much higher, I think, when we first started the quarter in Q2. I think a little bit of that dust is a little bit settling down. There’s obviously still a lot of uncertainty.

But, you know, actually, I think as we’ve monitoring the situation, I think the economy and particularly the consumer base has remained fairly resilient. And although there’s still some risk there, and we’re definitely being proactive around that, we really haven’t seen much impact to our customer base as of yet.

Tim Coffey, Analyst, Janney: Alright. Great. Thanks a lot for that, Peter. That’s great.

Drew, Conference Operator: Thanks a And

Tim Coffey, Analyst, Janney: then, Julia, looking at the the deposit portfolio, right, I mean, there seems to be a a pretty good balance now between commercial and consumer balances. Is that something, one, you’d like to, you know, continue, maintain that kind of that balance? And also, do you have a target for how much broker deposits you’ll need going forward?

Juliana Beliska, Chief Financial Officer, Hope Bancorp: Well, we have stated in the past our target loan to deposit ratio is to be up to 95%. We’re obviously at below 91% there, so we do have some growth in excess liquidity at the moment. However, but that should give you an idea for how much deposit growth we believe we need on an ongoing basis because we’ve also said in the past that on a medium term basis, we would like to target loan growth in the high single digits, right? Now in terms of the customer base balance, I think we have a pretty great balance right now between consumer and commercial loans. Our broker deposits are down to 5% of total deposits.

So this is a pretty good place from which to focus on generating, growth and expanding the customer wallet share and adding new relationships.

Tim Coffey, Analyst, Janney: Mhmm. Great. Those are my questions. Thank you very much.

Juliana Beliska, Chief Financial Officer, Hope Bancorp: Thank you, Tim.

Drew, Conference Operator: And we have a follow-up from Kelly Mata with KBW. Please go ahead.

Kelly Motta, Analyst, KBW: Hey. Thanks for letting me jump back in. Just a quick modeling question. For for Juliana. Can you remind us, how much more one time costs are yet to be realized?

And now with the conversion kicked out a bit, would those occur closer to conversion, or is there a cadence to expect, you know, for the back half of the year? Thanks.

Juliana Beliska, Chief Financial Officer, Hope Bancorp: One second. In the back half of the year, there’ll be probably a couple million, more of, one time costs in the third quarter and then, probably a couple million more in the fourth quarter just from various odds and ends, if you will. So that’s what I can share with you right now.

Kelly Motta, Analyst, KBW: Got it. That’s helpful. Thank you.

Drew, Conference Operator: And we have a follow-up from Gary Tenner from DA Davidson. Please go ahead.

Gary Tenner, Analyst, D.A. Davidson: Thanks. I just wanted to ask, I apologize if I if I missed this, but in terms of the new production in the quarter, what was the the average yield on new production?

Juliana Beliska, Chief Financial Officer, Hope Bancorp: The average yield in on the new production was, approximately 676%.

Gary Tenner, Analyst, D.A. Davidson: Great. Thank you.

Drew, Conference Operator: And we have a follow-up from Matthew Clark from Piper Sandler. Please go ahead.

Matthew Clark, Analyst, Piper Sandler: Just another housekeeping item for for next year. The tax rate, I know it’s gonna come down by 100 basis points, but does that imply 24% for next year?

Juliana Beliska, Chief Financial Officer, Hope Bancorp: No. I think that the tax rate for this year, on the full year basis at the 21%. When you look at 2026, I think our kind of tax year kind of going forward beyond this year will be, you know, in that 20 percentage. Okay. Again, not taking into account any tax law changes that may impact 2026 from the passage of recent federal legislation.

Okay? So just based on what is in place today, I would say that our tax year kind of going tax rate going forward will be kind of in that 20%, 21% range. And it’s down from the prior year because of the state apportionment tax law change, but also because we are continuing to invest in low income housing and other tax credit investments to help lower our tax burden.

Matthew Clark, Analyst, Piper Sandler: Okay. Great. And then just net charge offs, this quarter up a little bit. Anything chunky in there? Anything maybe unusual to call out?

Just trying to get a sense for, you know, where that might go going forward. I know it’s tough to say. But

Drew, Conference Operator: Yeah. And the the

Peter Koh, Chief Operating Officer, Hope Bancorp: have charges were up slightly this quarter. I do think that we remain at manageable levels. I mean, if we still still have some cleanup that we’re undergoing right now, so I would just look at sort of just portfolio management as the reason there. But going forward, as you have heard, you know, I think our level of overall problem credits are criticized assets going down. NPL did have a little uptick, but, you know, it’s a real estate property that’s well secured.

So on the asset quality front, we are, you know, again, cautiously optimistic. I do think there is a a road map here. The macroeconomic environment continues to support that, you know, we will remain at stable manageable levels going forward.

Juliana Beliska, Chief Financial Officer, Hope Bancorp: Great. Thanks again.

Drew, Conference Operator: And we have a follow-up from Kelly Motta from KBW. Please go ahead.

Kelly Motta, Analyst, KBW: Thanks. Thanks for letting me hop in a third time now. Last question for me on the NII guidance, you maintained it, but you also have the benefit of the securities restructuring in the back half of the year. It seems like some of the guide changes related to taking out a rate cut, the accretion from territorial, but on a core core basis, it’s still seems down. Wondering if you could share if that’s really just the function of rates or if there’s something else that is is creating that variance, whether it’s, you know, maybe some additional pressure on those deposit side or, slower slower loan growth.

Just wondering if you could provide some color as to what what drove that.

Juliana Beliska, Chief Financial Officer, Hope Bancorp: Yeah. I can add a couple comments to that. I mean, if you think about it, when we provided the guidance in April, right, we were looking at a rate curve with the first cut starting in June. So that would have given us two full quarters of a rate cut and then a cut in September, which would have given us like a full quarter of another cut, right? And all else equal, as you can see in our 10 Q disclosures, 100 basis points impacts our NII by 20,000,000 taking out so model to model, if we took out the impact of the curve change from our kind of first quarter forecast, that would have taken out about a net $4,000,000 of income.

So we were able to make that up and offset that with the securities portfolio repositioning, right? And then the change in the forward curve also impacted pace of recognition of accretion, higher for longer, all else equal, does slow down the prepayment speeds. So the upfront accretion in year one for us we’re now looking at $12,000,000 versus 14,000,000 So that kind of gets you to the math of maintaining the NII unchanged. And also, we’re continuing to improve the pace of originations, but quarter to quarter, the blended loan yield on originations did decrease a little bit. So continued kind of competitive pricing in the market for loan growth is also, you know, coming through.

But, basically, the maps on the on it are really, really curve driven and accretion driven. And then you can ask yourself what can we do to, you know, kind of change that conversation without just waiting for another rate cut. We’ve been very proactive in working on our deposit mix and reducing our higher cost deposits as you saw the continued improvement from broker deposit exposure, etcetera.

Kelly Motta, Analyst, KBW: That’s really, really helpful. Thanks again. I’ll step back for good now.

Matthew Clark, Analyst, Piper Sandler: This concludes

Drew, Conference Operator: our question and answer session. I would like to turn the conference back over to management for any closing remarks.

Kevin Kim, Chairman, President and CEO, Hope Bancorp: Thank you. Thank you, Dhruv. Once again, thank you all for joining us today, and we look forward to speaking with you in three months. So long, everyone.

Drew, Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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