Hope Bancorp Q3 Earnings Call Highlights

Key Points

• Strong third-quarter performance: Revenue rose 11% year over year to $157 million, while adjusted diluted EPS increased to $0.29. Results were supported by loan growth, a wider 3.02% net interest margin and a 44% increase in non-interest income.
• MANUBANK acquisition expands funding and scale: The transaction added approximately $2.6 billion of deposits and $2.2 billion of loans, including $600 million in non-interest-bearing deposits, while providing more than $500 million of excess liquidity. Management expects cost savings exceeding 40% of MANUBANK’s initial operating-expense base, with full savings projected in 2028.
• Growth outlook remains positive, but capital will decline: Hope expects roughly 15% year-over-year loan growth in 2026 and 16%–18% revenue growth excluding notable items. The acquisition is expected to reduce the CET1 ratio from 12.25% to approximately 10.2%, while credit quality continued to improve year over year.

Hope Bancorp NASDAQ: HOPE reported higher third-quarter earnings and revenue as loan growth, a wider net interest margin and increased fee income supported continued operating leverage. The company also completed its acquisition of SMBC MANUBANK’s commercial banking unit on Oct. 1, adding deposits, lending capabilities and a larger Southern California presence.

Chairman, President and CEO Kevin Kim said the company’s positive earnings momentum from the first half of 2026 continued during the third quarter, supported by revenue growth and stable asset quality.

Third-quarter revenue totaled $157 million, up 7% from the prior quarter and 11% from a year earlier. Pre-provision net revenue rose 11% sequentially and 21% year over year to $55 million. Reported diluted earnings were $0.28 per share, compared with $0.26 in the second quarter and $0.24 a year earlier. Excluding merger-related costs, diluted earnings were $0.29 per share, up from $0.27 in the prior quarter and $0.25 in the prior-year period.

Margin Expansion and Deposit Mix Improvement

Net interest income reached $135 million, increasing 5% from the second quarter and 7% from the third quarter of 2025. Chief Financial Officer Julianna Balicka said the growth reflected higher average earning assets, increased loan yields and lower deposit costs.

Net interest margin expanded to 3.02%, up 6 basis points sequentially and 13 basis points year over year. The quarter-over-quarter improvement was aided by a 5-basis-point increase in loan yields and a more favorable funding mix, according to Balicka.

Gross loans stood at $15.1 billion at Sept. 30, up 1% from the prior quarter and 3% from a year earlier. Growth was led by commercial and industrial lending and residential mortgages. Total deposits were $16.1 billion, rising 1.5% sequentially and 2% year over year.

The company continued to shift its funding mix away from higher-cost time deposits. Non-maturity deposits increased 6% during the quarter, while time deposits declined 5%. Time deposits represented 37% of total deposits at quarter-end, down from 40% a year ago.

During the question-and-answer session, Balicka said 48% of the company’s loan portfolio was straight variable-rate as of Sept. 30, with an additional 27% consisting of hybrid loans. She said the company has focused commercial real estate originations more heavily toward variable-rate loans in recent years.

Fee Income, Expenses and Credit Quality

Non-interest income totaled $22 million, up 17% from the second quarter and 44% from the year-earlier quarter. The increase reflected higher customer-related income and fees, stronger SBA loan-sale gains and $3 million in net gains from other loan sales, partly offset by lower investment-security sale gains.

Hope sold $72 million of SBA loans during the third quarter, generating net gains of $4.7 million. That compared with $68 million of SBA loan sales and $4.4 million in gains during the second quarter.

Non-interest expense was $103 million, up 4% sequentially and 6% from a year earlier. Excluding merger-related items, expenses were $100 million. The reported efficiency ratio improved to 65.3%, while the adjusted ratio improved to 63.6% from 65.2% in the second quarter and 67.6% a year earlier.

Credit-quality measures improved year over year. Criticized loans totaled $335 million, essentially unchanged from the prior quarter but down 10% from a year ago. Non-performing assets declined to $108 million, with the non-performing asset ratio improving to 57 basis points of total assets. Net charge-offs were $7 million, or an annualized 19 basis points of average loans, compared with 24 basis points in the prior quarter.

The provision for credit losses rose to $9 million from $7 million in the second quarter, primarily due to loan growth. The allowance for credit losses totaled $154 million, or 1.03% of loans receivable.

MANUBANK Acquisition Adds Deposits and Excess Liquidity

Management said the MANUBANK transaction expands its commercial banking franchise, increases its Southern California presence and enhances its ability to serve Korean and Japanese businesses. The acquisition also includes a partnership and collaboration agreement with SMBC that management said could create opportunities with multinational companies operating in the U.S.

Hope received approximately $307 million of cash through the transaction’s net settlement and did not pay a deposit premium, Balicka said. It also received $65 million of interest-bearing Federal funds.

• Acquired loans totaled about $2.2 billion before purchase-accounting adjustments.
• Acquired deposits totaled $2.6 billion before adjustments, including $600 million of non-interest-bearing demand deposits.
• The acquired deposits had a weighted average cost of 2.22% as of Sept. 30.
• Pro forma for the acquired deposits, Hope’s time-deposit share would decline to 33% from 37% at Sept. 30.
• Management estimated that acquired deposits would reduce the company’s cost of deposits by 5 basis points on a pro forma basis.

The acquired commercial portfolio included $1.2 billion of SBA loans previously purchased by MANUBANK in the secondary market. Hope sold that portfolio on Oct. 21 for $191 million in proceeds and recognized no gain or loss on the sale.

Balicka said the acquisition brought more than $500 million of excess liquidity, providing the company with flexibility to reduce maturing high-cost funding or grow assets. She said some funding that matures in the fourth quarter would have repriced at 4.4%.

The company expects fully phased-in cost savings of more than 40% of MANUBANK’s $136 million starting operating-expense run rate. Management said some savings will be realized immediately, followed by a period of more limited incremental savings before another phase tied to a core-system conversion. Balicka said full cost savings are expected in 2028, later than initially anticipated because of the conversion schedule.

Outlook and Capital

For full-year 2026, Hope expects end-of-period loan growth of about 15% year over year, including acquired MANUBANK balances and net of the SBA loan sale. Excluding notable items, management expects revenue growth of approximately 16% to 18% and pre-provision net revenue growth of about 23% to 25%.

At Sept. 30, Hope’s common equity Tier 1 capital ratio was 12.25% and its total capital ratio was 13.92%. The company expects its CET1 ratio to be approximately 10.2% following the MANUBANK acquisition, roughly 200 basis points below its Sept. 30 level.

The board declared a quarterly common-stock dividend of $0.14 per share, unchanged from previous quarters.

About Hope Bancorp (NASDAQ:HOPE)

Hope Bancorp, Inc is the holding company for Bank of Hope, a full-service commercial bank headquartered in Los Angeles, California. The bank serves businesses, individuals and communities throughout the United States, with a particular focus on Korean American and other multicultural markets.

Bank of Hope offers a range of banking products and services, including business and consumer deposit accounts, commercial and industrial lending, commercial real estate financing, small business loans, residential mortgage lending and wealth management services.

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