Hope Bancorp (HOPE) Q1 2025 earnings summary

Executive summary

• Q1 2025 net income was $21.1 million ($0.17 per diluted share); adjusted net income was $22.9 million ($0.19 per share), down from $24.3 million in Q4 2024 and 18.4% lower year-over-year, mainly due to lower net interest income and higher credit loss provisions.

• Completed the merger with Territorial Bancorp on April 2, 2025, adding $1.7 billion in low-cost deposits, $1 billion in high-quality residential mortgage loans, and expanding presence to Hawaii.

• All capital ratios increased quarter-over-quarter and year-over-year, with tangible common equity ratio rising to 10.20%.

Financial highlights

• Net interest income was $100.8 million, down 1% sequentially and 12.4% year-over-year; net interest margin increased to 2.54% from 2.50%.

• Noninterest income was $15.7 million, up 5% quarter-over-quarter excluding a prior one-time gain, and up 89.3% year-over-year, driven by resumed SBA loan sales and higher swap fees.

• Noninterest expense, excluding notable items, was $81.3 million, up quarter-over-quarter due to seasonal compensation increases and merger-related costs.

• Total deposits at March 31, 2025, were $14.5 billion, up 1% from prior quarter; loans receivable were $13.3 billion, down 2% from year-end 2024.

• Allowance for credit losses was $147.4 million (1.11% of loans receivable), unchanged from Q4 2024.

Outlook and guidance

• 2025 guidance: high single-digit percentage loan growth, high single-digit percentage net interest income growth (lowered from prior outlook), mid-20s percentage noninterest income growth, and low double-digit percentage noninterest expense growth.

• Management expects robust capital and liquidity to support prudent growth and continued investment amid macroeconomic and geopolitical volatility.

• Loan growth expected to be weighted toward the second half of 2025, with $14 million in accretion income from the Territorial merger.

• Fewer rate cuts than assumed would have a muted impact on 2025 NII, as deposit cost reductions offset lower loan yields.

• Economic forecasts used in credit loss modeling project GDP growth of 2.0% in 2025 and stable CRE prices, with unemployment at 4.1%.