Hope Bancorp NASDAQ: HOPE reported first-quarter 2026 results that management said reflected strong year-over-year growth in profitability and balance sheet trends, aided by organic growth and the benefits of its Territorial Bancorp acquisition. The company also highlighted a pending acquisition of the commercial banking unit of SMBC MANUBANK, a transaction it described as accretive and strategically important for expanding commercial banking capabilities in Southern California.
First-quarter earnings show year-over-year gains, sequential pressure from provisions and taxes
Chairman, President, and CEO Kevin S. Kim said Hope’s first-quarter 2026 results included “strong year-over-year growth in net income, revenue, loans, and deposits,” while pre-provision net revenue increased modestly from the prior quarter.
Net income totaled $30 million, up 40% from $21 million in the year-ago quarter. Compared with $34 million in the fourth quarter of 2025, net income declined, which Kim attributed to “higher provision for credit losses and income taxes, partially offset by growth in pre-provision net revenue.”
Pre-provision net revenue was $47 million, up 43% year over year from $33 million and up 1% from $46 million in the prior quarter.
Manubank acquisition: expected to expand commercial platform and core deposits
Kim said the company announced on March 31 an “accretive acquisition” of SMBC MANUBANK’s commercial banking unit, referring to it as “Manubank.” The company expects the transaction to close in the second half of 2026, subject to regulatory approvals and other customary conditions.
Kim said the deal aligns with Hope’s priorities of building commercial banking capabilities, expanding reach among middle-market and multinational clients, and growing the core deposit franchise. He said the platform would deepen Hope’s presence in Greater Los Angeles and add commercial banking capabilities including “diversified middle market lending, franchise finance, and specialty deposit verticals, such as trust and estate banking.”
From a financial perspective, Kim said the pending acquisition is expected to add approximately $2.5 billion in commercial and industrial and commercial real estate loans and $2.7 billion in deposits, with about 3% in CDs. Kim said the company anticipates these deposits will contribute to a lower overall cost of deposits. He added that the transaction is projected to be “meaningfully accretive to earnings in 2027,” improve profitability including returns on equity, and be funded without issuing new shares. Kim also said Hope expects to establish a collaboration and partnership agreement with SMBC to expand services to a broader global multicultural customer base.
Kim said Hope is anticipating a tangible book value earn-back period of approximately two years, with dilution driven by creation of a core deposit intangible and the net impact from balance sheet marks and acquisition-related charges. Management’s 2026 outlook assumes roughly one quarter of contribution from the transaction, using a mid-point-of-second-half closing for “simple arithmetic,” CFO Julianna Balicka said.
Balance sheet trends: stable loans, deposit mix improvement and CD runoff
At March 31, 2026, gross loans were $14.74 billion, compared with $14.79 billion at the end of the prior quarter. Year over year, loans increased 10% from $13.34 billion, which Kim said reflected the Territorial acquisition and organic residential mortgage growth. Kim said loan pipelines were “strong and building” entering the second quarter.
Deposits were $15.73 billion at quarter end, up 1% sequentially and up 9% year over year, primarily due to the Territorial acquisition. Kim said non-maturity interest-bearing deposits increased 3% quarter over quarter and non-interest-bearing demand deposits rose 0.5%, while higher-cost CDs were “intentionally run off.”
Margin and funding costs: deposit repricing continues to help
CFO Julianna Balicka said net interest income was $124 million in the first quarter, up 23% from the first quarter of 2025 and down 3% from the prior quarter. She attributed the sequential decline to a lower day count and a modest 0.4% decrease in average earning assets, as average loans increased but other earning assets fell.
Net interest margin was 2.90%, unchanged from the prior quarter, as lower loan yields were offset by lower deposit costs. Year over year, margin expanded 36 basis points, which Balicka said was driven primarily by improved funding costs.
Balicka said the cost of average interest-bearing deposits decreased 77 basis points year over year to 3.37% from 4.14%, which she described as “equivalent to a deposit beta of over 100% relative to the decline in the federal funds target rate” over the same period. She said the bank continues to benefit from time deposit repricing, noting that in the quarter it originated time deposits at a blended rate of 3.62%, down from 3.99% on maturing CDs. In response to an analyst question, Balicka said the company sees about “five to seven basis points” of interest-bearing deposit cost reduction each quarter “just from the mathematics” of CD repricing, assuming conditions hold.
On loan pricing, Balicka said yields on new loans in the quarter were approximately 6.4%. She said if the federal funds rate stays flat and time deposits continue to reprice lower, Hope could see margin expansion as older, lower-yielding commercial real estate loans mature and reprice and funding costs improve.
Expenses, credit trends, and capital actions
Non-interest income was $17 million, down from $18 million in the fourth quarter of 2025 and up from $16 million a year ago. Balicka attributed the sequential decline to fewer gains on sales of investment securities and lower customer-level swap fee income due to reduced transaction activity. Hope sold $53 million of SBA loans in the quarter, compared with $46 million in the fourth quarter, and recognized $3 million in SBA gains on sale, up about $700,000 sequentially.
Non-interest expense totaled $94 million, down from $99 million in the prior quarter. Balicka said the sequential decrease reflected continued expense discipline, while the year-over-year increase from $84 million was primarily due to the inclusion of Territorial’s operating expenses. The efficiency ratio improved to 67% from 68.2% in the fourth quarter and 72% a year earlier.
Asset quality metrics improved, with Balicka reporting criticized loans of $325 million at March 31, down 7% quarter over quarter and down 28% year over year. The criticized loan ratio improved to 2.22% from 2.39% in the prior quarter and 3.36% a year earlier. Net charge-offs were $11 million, or 29 basis points annualized of average loans, compared with 10 basis points annualized in the prior quarter. Bank of Hope President and COO Peter J. Koh said the higher charge-offs reflected “previously identified credit concerns that we are cleaning up right now,” adding that management felt “very good about asset quality” given improving trends in nonperforming loans and criticized assets.
The provision for credit losses was $9 million, up from $7 million in the fourth quarter, reflecting the increase in net charge-offs. The allowance for credit losses was $155 million, with a coverage ratio of 1.06%, compared with $157 million and 1.07% at December 31, 2025.
During the quarter, Hope repurchased approximately 604,000 shares for $7 million, representing about 0.5% of shares outstanding, and ended the quarter with $29 million of remaining repurchase capacity. Asked about buyback appetite and targets, Kim said repurchases would depend on capital generation and growth opportunities and would remain “opportunistic.” The board declared a quarterly dividend of $0.14 per share, payable on or around May 22, 2026, to shareholders of record as of May 8, 2026.
Looking ahead, Kim said Hope’s updated full-year 2026 outlook incorporates the preliminary impact of the pending Manubank transaction. Management expects loan growth of over 20% from December 31, 2025 to December 31, 2026, reflecting the deal and organic growth, while moderating commercial real estate growth ahead of closing to manage pro forma concentrations. Balicka said organic loan growth is expected to be mid-single digits, driven by C&I and residential mortgage lending, with flat CRE balances. Management assumed no federal funds rate cuts in 2026 and reaffirmed an expected full-year effective tax rate of 20% to 25%.
About Hope Bancorp NASDAQ: HOPE
Hope Bancorp, Inc operates as the bank holding company for Hope Bank, a California-chartered financial institution serving small and middle-market businesses, professionals and affluent individuals. The company's principal activities include accepting a variety of deposit products—such as checking accounts, savings and money market accounts, and time deposits—and extending commercial credit facilities. With a focus on community banking, Hope Bancorp tailors its offerings to meet the needs of clients in diverse industries, including real estate, professional services and import/export trade.
In its lending business, Hope Bancorp provides commercial real estate loans, construction financing, working capital lines of credit and equipment financing.
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