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Date

Tuesday, April 28, 2026 at 12:30 p.m. ET

Call participants

  • Chairman, President, and Chief Executive Officer — Kevin S. Kim
  • Executive Vice President and Chief Financial Officer — Julianna Balicka
  • President and Chief Operating Officer, Bank of Hope — Peter Koh

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Takeaways

  • Net income -- $30 million, up 40% year over year, but down from $34 million sequentially due to higher provision for credit losses and taxes.
  • Pre-provision net revenue -- $47 million, a 43% increase year over year and a 1% increase quarter over quarter.
  • Gross loans -- $14.74 billion, up 10% year over year, stable quarter over quarter.
  • Deposits -- $15.73 billion, up 1% quarter over quarter and 9% year over year, with higher non-maturity interest-bearing and noninterest-bearing demand deposits; CDs intentionally reduced.
  • Net interest income -- $124 million, up 23% year over year, down 3% sequentially due to fewer days in the quarter and a 0.4% decline in average earning assets.
  • Net interest margin -- 2.90%, unchanged quarter over quarter, expanded 36 basis points year over year, mainly from lower funding costs.
  • Cost of average interest-bearing deposits -- Fell to 3.37%, a 77-basis-point year-over-year decline from 4.14%, and still benefiting from CD repricing.
  • Noninterest income -- $17 million, down $1 million quarter over quarter and up $1 million year over year, reflecting lower securities gains and swap fee income, but higher SBA loan sales.
  • Noninterest expense -- $94 million, down sequentially, but up from $84 million year over year due to inclusion of Territorial Bancorp operating expenses.
  • Efficiency ratio -- Improved to 67% from 68.2% in the previous quarter and 72% in the prior-year quarter, reflecting discipline in expense management.
  • Criticized loans -- $325 million, down 7% quarter over quarter and 28% year over year; criticized loan ratio improved to 2.22% of total loans, decreasing from both prior periods.
  • Net charge-offs -- $11 million, annualized 29 basis points of average loans, up from 10 basis points last quarter, attributed to previously identified credit concerns.
  • Provision for credit losses -- $9 million, up from $7 million in the prior quarter, reflecting higher net charge-offs.
  • Allowance for credit losses -- $155 million, with a coverage ratio of 1.06% at quarter-end.
  • Pending Manubank acquisition -- Expected to add $2.5 billion in C&I and CRE loans and $2.7 billion in deposits, with only 3% in CDs; projected to be accretive to 2027 earnings and settled in cash without new equity issuance.
  • Capital management -- Repurchased 604,000 shares for $7 million in the quarter; $29 million remains under existing authorization for opportunistic repurchases.
  • Dividend -- Quarterly cash dividend of $0.14 per share declared, payable in May 2026.
  • 2026 outlook -- Loan growth over 20% between December 2025 and December 2026; revenue growth at high end of 15%-20% range with a quarter of Manubank contribution; pre-provision net revenue growth expected at 25%-30%.
  • Organic loan growth -- Management expects mid-single-digit growth in C&I and residential mortgages, with flat commercial real estate balances absent M&A.
  • Purchase accounting benefit -- $4 million for the quarter, consistent with prior quarters, with ongoing steady contribution from Territorial’s long-duration residential mortgage portfolio.
  • New loan yields -- Loans originated during the quarter yielded approximately 6.4%.
  • Deposit cost trend -- Management anticipates 5%-7% basis points of quarterly reduction in interest-bearing deposit cost, driven by ongoing CD repricing, assuming no Fed rate cuts in 2026.
  • CRE concentration pro forma -- Commercial real estate concentration post-Manubank is expected at approximately 320%.
  • Tangible book value impact -- Projected earn-back period of roughly two years for acquisition-related dilution, resulting primarily from core deposit intangible and balance sheet marks.

Summary

Hope Bancorp (HOPE +2.06%) reported a 40% year-over-year increase in net income and stable margins, supported by organic growth and benefits from recent M&A activity. The pending SMBC Manubank acquisition is expected to significantly expand both lending and deposit franchises, adding substantial commercial loan and deposit balances, and is projected to enhance core earnings and return on equity beginning in 2027. Management highlighted improved asset quality, with lower criticized and nonperforming loans, and net charge-offs primarily related to previously identified credit exposures. Capital actions included a $7 million share repurchase and maintenance of a cash dividend, while forward guidance anticipates double-digit loan growth, continued improvement in operating efficiency, and meaningful earnings accretion from the Manubank integration.

  • Julianna Balicka stated, "The yields on the new loans were approximately 6.4%," indicating steady new loan pricing relative to market levels.
  • Quarterly deposit pricing continued to benefit from expiring high-cost CDs, with management expecting further cost declines of about 5%-7% basis points in interest-bearing deposit cost reduction each quarter if rates remain unchanged.
  • Balicka confirmed, "Not materially different quarter over quarter. About similar. It is $4 million," regarding the purchase accounting benefit from the Territorial transaction, describing it as a steady benefit each quarter for a number of years.
  • For organic growth, Balicka said, "For our outlook, looking forward on a full-year basis, I would expect our organic loan growth to be mid-single digits, and it would come from C&I and residential mortgage, C&I of course being the higher-percentage loan grower. And I would expect flat CRE balances," indicating a strategic focus on diversification and prudent loan growth as Manubank integration approaches.
  • Preliminary modeling for SMBC Manubank guidance assumes transaction closing at the midpoint of the second half, with pro forma CRE concentrations forecasted in the 320% range.

Industry glossary

  • Commercial and industrial (C&I) loans: Lending to businesses (not secured by real estate) for working capital or general business use.
  • Criticized loans: All loans graded as special mention, substandard, or doubtful, flagged by management as having potential weaknesses.
  • CECL double count: The risk of recording credit losses twice in purchase accounting under the Current Expected Credit Loss standard during bank M&A transactions.
  • Deposit beta: The degree to which a bank's deposit rates change in response to moves in a benchmark interest rate, such as the federal funds rate.
  • Core deposit intangible: An intangible asset recognized during bank acquisitions representing the value of deposit relationships.

Full Conference Call Transcript

Kevin Kim, Hope Bancorp, Inc. Chairman, President, and CEO, and Julianna Balicka, Hope Bancorp, Inc. Executive Vice President and Chief Financial Officer. Peter Koh, Bank of Hope President and Chief Operating Officer, is also here with us as usual and will be available for the Q&A session. With that, let me turn the call over to Kevin Kim. Kevin?

Kevin Kim: Thank you, Maxime. Good morning, everyone, and thank you for joining us today. Our first quarter 2026 results reflected strong year-over-year growth in net income, revenue, loans, and deposits, driven by organic growth and the strategic benefits of the Territorial Bancorp acquisition. Quarter over quarter, our pre-provision net revenue grew, supported by improved efficiency and continued progress in lowering our cost of deposits. Beginning with Slide three, you will find a brief overview of our results. Net income for 2026 totaled $30 million, up 40% year over year from $21 million in the prior year period.

Quarter over quarter, net income decreased from $34 million, reflecting higher provision for credit losses and income taxes, partially offset by growth in pre-provision net revenue. Pre-provision net revenue for the first quarter totaled $47 million, up 43% year over year from $33 million and up 1% quarter over quarter from $46 million. The provision for credit losses increased in the 2026 first quarter, primarily reflecting higher net charge-offs due to the successful resolution of problem loans. This quarter, criticized loans decreased $26 million, or 7%, from the prior quarter. The effective tax rate was higher in 2026 as the 2025 fourth quarter tax provision benefited from true-up items.

On 03/31/2026, we announced the accretive acquisition of the Commercial Banking unit of SMBC Manubank, which we will refer to as Manubank throughout this call. We expect the transaction to close in 2026, subject to regulatory approvals and satisfaction of other customary closing conditions. We are very excited about this transaction, which aligns with our key priorities of building our commercial banking capabilities, expanding our reach among middle market and multinational clients, and growing our core deposit franchise. We believe Manubank will deepen our presence in the greater Los Angeles market and add a highly complementary commercial banking platform, including diversified middle market lending, franchise finance, and specialty deposit verticals such as trust and estate banking.

The pending transaction will bring a unique opportunity to combine SMBC Manubank's Japanese banking division with our established Korean subsidiary banking group, creating a differentiated, scaled platform to serve Asian multinational businesses operating in the United States. From a financial perspective, 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, of which only approximately 3% are CDs and which we anticipate will contribute a lower overall cost of deposits.

We project this transaction to be meaningfully accretive to earnings in 2027, strengthen our recurring core earnings power, and improve our profitability, including returns on equity, through an efficient deployment of capital without the issuance of new shares. In addition, we will establish a collaboration and partnership agreement with SMBC, which is expected to create meaningful opportunities to expand our services to a broader global multicultural customer base. Overall, this is a highly attractive transaction that we believe will support our progress toward achieving our strategic objectives. Moving on to Slide four, during the quarter, we returned capital through a repurchase of approximately 604 thousand common shares totaling $7 million and representing about 0.5% of total shares outstanding.

We have $29 million of remaining capacity under our existing authorization, which we intend to deploy opportunistically. Our Board of Directors declared a quarterly common stock dividend of $0.14 per share, payable on or around 05/22/2026 to stockholders of record as of 05/08/2026. Under the terms of the definitive agreement, the pending Manubank acquisition will be settled in an all-cash transaction and is expected to result in a net cash benefit to Hope Bancorp, Inc. On this slide, you can see our optimized pro forma capital ratios, and we are anticipating a tangible book value earn-back period of approximately two years.

The pro forma tangible book value dilution would come from the creation of the core deposit intangible and the net impact to equity from balance sheet marks and acquisition-related charges. Continuing to Slide five, loan balances were essentially stable linked quarter. At 03/31/2026, gross loans totaled $14.74 billion compared with $14.79 billion in the prior quarter. Year over year, gross loans increased 10% from $13.34 billion at 03/31/2025, reflecting the impact of the Territorial acquisition and organic residential mortgage growth. As we enter the second quarter, our loan pipelines are strong and building, reflecting improving production trends and increased activity across our markets. On the deposit side, deposits were $15.73 billion at 03/31/2026, growing 1% quarter over quarter.

Non-maturity interest-bearing deposits were up 3%, and noninterest-bearing demand deposits were up 0.5%. Higher-cost CDs were intentionally run off. Year over year, deposits increased 9%, primarily due to the Territorial Bancorp acquisition. With that, I will ask Julianna to provide additional details on our financial performance for the first quarter. Julianna?

Julianna Balicka: Thank you, Kevin, and good morning, everyone. Beginning on Slide six, our net interest income totaled $124 million for 2026, up 23% from 2025 and a decrease of 3% from the prior quarter. Quarter over quarter, the decrease in net interest income reflected the impact of a lower day count in the first quarter and a modest decrease of 0.4% in average earning assets, in which average loans were up but other earning assets declined. The first quarter 2026 net interest margin was 2.90%, unchanged quarter over quarter. The impact from decreased loan yields was more than offset by lower deposit costs. Year over year, our net interest margin expanded 36 basis points from 2025.

The increase was primarily driven by improvements in our funding costs. The cost of our average interest-bearing deposits decreased 77 basis points to 3.37% in 2026, down from 4.14% in 2025, equivalent to a deposit beta of over 100% relative to the decline in the federal funds target rate over the same period. The full impact of the Fed funds target rate cuts is still benefiting us with the continued repricing of time deposits. In the first quarter of 2026, we originated time deposits at a blended rate of 3.62%, down from a blended rate of 3.99% on our maturing CDs.

On Slide seven, we present the quarterly trends in our average loan and deposit balances and our weighted average yields and costs. Onto Slide eight, we summarize our noninterest income. For 2026, noninterest income totaled $17 million, down $1 million compared with $18 million in the prior quarter and up $1 million compared with $16 million for 2025. The quarter-over-quarter decrease in noninterest income was primarily due to less gains on the sale of investment securities and lower customer-level swap fee income, the latter of which reflected less underlying transaction activity in the first quarter. During 2026, we sold $53 million of SBA loans compared with $46 million sold in 2025.

Accordingly, we recognized SBA gains on sale of $3 million for 2026, up approximately $700 thousand from 2025. Moving on to noninterest expense on Slide nine, our noninterest expense totaled $94 million in 2026, down from $99 million in 2025. The sequential quarter decrease reflected continued expense management discipline. Year over year, noninterest expense increased from $84 million in 2025, primarily due to the inclusion of Territorial's operating expenses. The efficiency ratio for 2026 improved to 67%, down from 68.2% in the prior quarter and down from 72% in the year-ago quarter, demonstrating continued positive operating leverage alongside disciplined expense management.

Next, on to Slide 10, I will review our asset quality, which has continued to steadily improve and reflected a quarter-over-quarter reduction in nonperforming loans. This was primarily driven by successful resolutions of problem loans. At 03/31/2026, criticized loans totaled $325 million, down 7% quarter over quarter and down 28% year over year. The sequential quarter improvement included a 23% reduction in special mention loans and a 2% reduction in classified loans. The criticized loan ratio improved to 2.22% of total loans at 03/31/2026, down from 2.39% at 12/31/2025 and down from 3.36% at 03/31/2025.

Net charge-offs were $11 million for the 2026 first quarter, or annualized 29 basis points of average loans, compared with 10 basis points annualized for the prior quarter and 25 basis points annualized for the year-ago quarter. Reflecting the linked quarter change in net charge-offs, the 2026 first quarter provision for credit losses was $9 million, up from $7 million for the 2025 fourth quarter. The allowance for credit losses totaled $155 million and the coverage ratio was 1.06% at 03/31/2026, compared with $157 million and a coverage ratio of 1.07% at 12/31/2025. With that, let me turn the call back to Kevin.

Kevin Kim: Thank you, Julianna. Moving on to the outlook, on Slide 11 we present our updated management outlook for the full year 2026, including the preliminary impact of the pending Manubank transaction, which we expect to close in 2026, subject to regulatory approvals and satisfaction of other customary closing conditions. Accordingly, we expect loan growth of over 20% between 12/31/2025 and 12/31/2026, reflecting the impact of the Manubank transaction and organic growth. Relative to our assumptions at the beginning of the year, we are moderating CRE loan growth ahead of the transaction close to manage pro forma loan concentration.

Our current pipelines are strong and building, and we anticipate commercial and residential mortgage loan growth will continue to be robust in 2026. We anticipate year-over-year total revenue growth to be at the higher end of our 15% to 20% range for the full year of 2026, assuming one quarter of contribution from the pending Manubank transaction. The incremental revenue from Manubank would be partially offset by the impact from the aforementioned slower commercial real estate loan growth. We assume no Fed funds target rate cuts in 2026. We anticipate unchanged pre-provision net revenue growth, excluding notable items, at a range of 25% to 30% for the full year 2026.

This includes a quarter's worth of impact of Manubank's operating expenses. We anticipate the benefits of cost savings from the Manubank transaction will begin from 2027. Accordingly, we project the Manubank transaction to be meaningfully accretive to 2027 earnings. We continue to assume a steady asset quality backdrop and a full-year effective tax rate between 25% and 26% in 2026. With that, operator, please open up the call for questions.

Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star and then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before asking the question. Participants are requested to please restrict your questions to two per participant. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. At this time, we will pause momentarily to assemble our roster. From the line of Gary Tenner from D.A. Davidson, please go ahead.

Gary Tenner: Thanks. Good morning. I wanted to ask about the repurchase activity in the quarter. Could you characterize the forward appetite here and whether you have an updated target payout ratio or target capital levels we should be thinking about?

Kevin Kim: That will depend on cash flow generation and growth opportunities. We will continue to evaluate opportunistic repurchases within that framework. We still have capacity under our share repurchase authorization, and we already purchased $7 million of shares since it was refreshed last quarter. So that is where we stand today, and we do regularly review our capital allocation priorities. So the use of capital to repurchase our shares will be opportunistic.

Gary Tenner: Okay. Appreciate that. And then, Julianna, can you provide the purchase accounting benefit for the quarter?

Julianna Balicka: Not material.

Gary Tenner: Not materially different than last quarter, or just in dollars not material?

Julianna Balicka: Not materially different quarter over quarter. About similar. It is $4 million.

Gary Tenner: Okay.

Julianna Balicka: Thank you. I believe I have answered this question in prior quarters. It might have been even your question. With the Territorial transaction, the residential mortgage loans are long-dated loans. It is a long-term portfolio. So the purchase accounting benefit is going to be a steady benefit each quarter for a number of years, as opposed to when you do a commercial loan acquisition where it is a much shorter weighted average life of the portfolio, so there is much more fluctuation to purchase accounting benefit.

Gary Tenner: I appreciate that. I just wanted to confirm the number. Thank you.

Operator: We have the next question from the line of Matthew Clark from Piper Sandler. Please go ahead.

Matthew Clark: Hey, good morning everyone. Thanks for the questions. I want to start on the expense run rate. Some pretty good improvement here from the fourth quarter. Just want to get a sense for whether that is sustainable and what a normalized run rate might be here in the first quarter.

Julianna Balicka: Thank you, Matt. This quarter, you saw some good expense management, and I would say I will go back to our comments about expense for the full year of 2026 relative to last quarter, when we made comments around the fourth quarter as a jump-up point for a run rate. The first quarter was a good quarter with some good control, but I would anticipate that as our production strengthens and our revenue growth strengthens throughout the year, the expenses will tick up from there. But overall, we will stay within the original comments that we made for you last quarter regarding full-year growth that we talked about.

Matthew Clark: Got it. Okay. And then are you opting out of the CECL double count with the acquisition?

Julianna Balicka: We are still going to evaluate.

Matthew Clark: Okay. Okay. And then just the spot rate on deposits, if you have it, and I know there is going to be an incremental benefit from CD repricing, but just thoughts on deposit cost outlook with the Fed on hold?

Julianna Balicka: Sorry. Could you repeat the second part of your question?

Matthew Clark: Just the deposit cost outlook with the Fed on hold and competitive pricing on the CD side.

Julianna Balicka: Right. Our CDs are continuing to reprice, as we quoted in our script about how much pickup we are getting each quarter. So when we look at our deposit cost outlook for the rest of the year, each quarter we see about 5 to 7 basis points of interest-bearing deposit cost reduction, just from the mathematics.

Matthew Clark: Yep. Got it. Thank you. Just getting fresh on the CECL double count.

Julianna Balicka: In our 10-K and 10-Q, you would have seen that we already adopted the ASU for the Territorial transaction.

Matthew Clark: Okay. Thanks again.

Operator: Thank you. Participants, if you have a question, please press star and then 1. We have the next question on the line of Kelly Motta from KBW. Please go ahead.

Kelly Motta: Thanks for the question. Maybe to kick it off with loan growth, your guidance implies some pullback in commercial real estate with an eye to manage those concentrations. Can you provide any color into Q1 being down a little bit? I am wondering if that was in anticipation of signing this deal, what you were seeing in terms of payoffs, and, kind of strategically moving forward, your organic outlook for resi and commercial as you manage ahead?

Julianna Balicka: For our outlook, looking forward on a full-year basis, I would expect our organic loan growth to be mid-single digits, and it would come from C&I and residential mortgage, C&I of course being the higher-percentage loan grower. And I would expect flat CRE balances.

Kelly Motta: Okay. That is pretty helpful. And can you remind us your pro forma CRE concentrations for SMBC Manubank?

Julianna Balicka: It will be something in that 320% range, depending on where the final balances land.

Kelly Motta: Got it. That is helpful. And then just a point of clarification on your guidance. I believe you said that you have about a quarter of SMBC Manubank, like a quarter’s worth of results. I know the close is in the second half of the year. Could you just provide what was baked into the guidance in terms of timing—earlier in the second half of the year versus the end? I just want to make sure I am modeling that appropriately.

Julianna Balicka: Nothing more complicated than just plugging in a close at the midpoint of the second half of the year for simple arithmetic. The close will come when it comes in the second half of the year. Obviously, we would like to close earlier than later, but for the pure mathematics of an outlook, we are using mid–second half.

Kelly Motta: Got it. That is helpful. Maybe last question for me. Net charge-offs were up a little bit, although you did have improvement in NPAs and, I believe, criticized. Can you provide any color and overview as to what you are seeing in the book and anything you are incrementally watching more? Thank you.

Peter Koh: Sure. Net charge-offs, I think, are a little elevated this quarter. It is up and down a little bit, but still within the reasonable range that we have been expecting, and a lot of these represent previously identified credit concerns that we are cleaning up right now. Overall, we feel very good about asset quality. You see continuing improvement in asset quality trends. NPLs were down, and criticized assets have been coming down sequentially quarter over quarter. So overall, I think we are in good shape in terms of credit.

Kelly Motta: Great. Thank you so much.

Operator: We have the next question from the line of Timothy Coffey from Brean Capital. Please go ahead.

Timothy Coffey: Thank you. Good morning, everybody. Julianna, what were the new loan yields—the yields on the new loans in the quarter?

Julianna Balicka: The yields on the new loans were approximately 6.4%.

Timothy Coffey: And then kind of on the organic margin, I think the conventional thinking was that we would see expansion going into the back half of this year. Is that still a reasonable expectation?

Julianna Balicka: If the Fed funds stays flat and we continue to have improvement in our cost of deposits from the repricing of CDs, and if interest rates stay flat for loan yields, all else equal, then you would see margin expansion because the earning asset side would not come down with rate cuts. In fact, it would benefit because the back book of our low-yielding CRE loans would continue to mature and reprice to market rates, and we are continuing to improve our cost of funds.

Timothy Coffey: Great. The rest of my questions have been asked and answered. Thank you.

Operator: That was the last question. I would like to turn the conference back over to management for any closing comments.

Kevin Kim: Thank you. In summary, with our continued progress across our key strategic priorities and the addition of a compelling strategic transaction, we believe we are well positioned to continue building momentum and delivering long-term value for our stockholders. In closing, I would also like to thank our colleagues for their ongoing dedication and commitment, which remain critical to the execution of our strategy and the strength of our organization. Thank you all again for joining us today, and we look forward to speaking with you next quarter. Bye, everyone.

Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.