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HOPE BANCORP INC (HOPE)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered strong operating momentum: net interest income rose 8% QoQ to $126.6MM, net interest margin expanded 20bps to 2.89%, and efficiency (ex-notables) improved to 67.5% .
  • GAAP diluted EPS was $0.24; EPS excluding notable items was $0.25 (up 29% QoQ), supported by lower credit costs and positive operating leverage .
  • Asset quality improved: criticized loans fell 10% QoQ to 2.56% of total loans, NCOs dropped to 0.14% annualized, while reserves edged up to 1.05% of loans .
  • Versus consensus: normalized EPS modestly missed ($0.25 vs $0.258*), and SPGI “revenue” missed ($130.1MM* vs $138.9MM*), driven by lower SBA gains and higher compensation costs; note definitional differences (company “revenue” was $142.0MM) .
  • Management raised full-year outlook: ~10% NII growth, ~30% noninterest income growth (ex-notables), ~15% noninterest expense growth (ex-notables), and ~14% 4Q25 effective tax rate; $0.14 dividend declared .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin expansion: NIM widened 20bps QoQ to 2.89% on higher earning asset yields and lower deposit costs; average loan yield rose to 5.93% and cost of IB deposits declined to 3.69% .
  • Asset quality improvement: criticized loans down 10% QoQ to $372.9MM (2.56% of loans); NCOs reduced 57% QoQ to $5.1MM (0.14% ann.) .
  • Management execution: “Net interest income grew a robust 8% quarter-over-quarter… positive operating leverage and lower credit costs contributed to the strong earnings growth” — Kevin S. Kim, CEO .

What Went Wrong

  • Noninterest income headwind: SBA loan sales gains fell to $2.8MM from $4.0MM QoQ; noninterest income ex-notables decreased $0.5MM QoQ .
  • Higher compensation costs: noninterest expense ex-notables increased to $95.9MM (+4% QoQ) reflecting sustained talent investments .
  • Consensus optics: normalized EPS was slightly below SPGI consensus, and SPGI “revenue” missed despite company-reported revenue growth; definitional mismatch complicates the headline comparison .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Net Interest Income before Provision ($MM)$104.8 $117.5 $126.6
Noninterest Income ($MM)$11.8 $(23.0) $15.4
Revenue ($MM, Company-defined)$116.6 $94.6 $142.0
Net Interest Margin (%)2.55% 2.69% 2.89%
Diluted EPS (GAAP) ($)$0.20 $(0.22) $0.24
Diluted EPS (ex-notables) ($)$0.21 $0.19 $0.25
Provision for Credit Losses ($MM)$3.3 $15.0 $8.7
Efficiency Ratio (ex-notables) (%)68.44% 69.09% 67.52%
Criticized Loans / Total Loans (%)3.71% 2.87% 2.56%
NCO Ratio (annualized, %)0.17% 0.33% 0.14%
KPIQ3 2024Q2 2025Q3 2025
Total Deposits ($B)$14.73 $15.94 $15.83
Noninterest Demand Deposits ($B, % of total)$3.72 (25.3%) $3.49 (21.9%) $3.51 (22.2%)
Gross Loans ($B)$13.64 $14.45 $14.62
Gross Loan-to-Deposit Ratio (%)92.6% 90.6% 92.3%
CET1 / Tier 1 / Total Capital (%)13.07 / 13.79 / 14.82 12.06 / 12.76 / 13.76 12.12 / 12.81 / 13.83
TCE Ratio (%) / TCE per Share ($)10.08% / $14.10 9.43% / $13.26 9.63% / $13.51
Loan Mix ($MM; %)Q3 2024Q2 2025Q3 2025
CRE$8,630.8 (63.3%) $8,385.8 (58.0%) $8,418.8 (57.6%)
C&I$3,901.4 (28.6%) $3,725.3 (25.8%) $3,736.5 (25.6%)
Residential & Other$1,085.9 (7.9%) $2,323.7 (16.1%) $2,431.6 (16.6%)
Actual vs SPGI ConsensusQ3 2025 ConsensusQ3 2025 ActualOutcome
EPS (Primary, $)0.2575*0.25 Miss (small)
Revenue ($MM, SPGI)138.9*130.1*Miss; note company-reported revenue was $142.0MM

Values marked with * were retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Q2 2025 deck)Current Guidance (Q3 2025 deck)Change
End-of-Period Loans (incl. HFS)FY 2025 vs 2024High single-digit % growth High single-digit % growth Maintained
Net Interest IncomeFY 2025 vs 2024High single-digit % growth; drivers updated (fewer cuts; ~$12MM loan accretion; ~$6MM H2 portfolio benefit) ~10% growth; assumes two 25bps cuts in Oct/Dec 2025 Raised / Clarified
Noninterest Income (ex-notables)FY 2025 vs 2024Upper-20s % growth ~30% growth Raised
Noninterest Expense (ex-notables)FY 2025 vs 2024Low double-digit % growth ~15% growth Raised
Effective Tax Rate (ex-notables)4Q 2025~21% full-year; 14% in 3Q/4Q ~14% in 4Q25 Affirmed 4Q; lower full-year run-rate trajectory

Dividend: Board declared a quarterly cash dividend of $0.14 per share (payable Nov 21, 2025; record date Nov 7, 2025) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Deposit pricing/betasCumulative IB deposit beta ~54% since Sep-2024 cuts; ability to cut with future cuts Money market spot beta ~85% on Sep cut; end-Sept spot total deposit rate 2.82% (IB 3.62%); avg Sept margin 2.96% Improving cost of funds
Loan accretion (Territorial)~$4MM in Q2 accretion; ~$12MM expected in 2025 (revised from $14MM) $5MM loan accretion in Q3; other PAA items minimal Steady contribution
SBA loan salesQ1/Q2 sold $50MM/$67MM; Q2 gains $4.0MM Q3 sold $48MM; gains $2.8MM; shutdown halted new 7(a) secondary market, but existing approvals unaffected Temporarily softer gains
Territorial integrationAdded low-cost deposits, RM loans; system conversion expected by end of next year Ongoing stabilization; incremental cost saves; conversion timeline intact On track
Asset qualityQ1 NPA down; Q2 NPA up on one CRE credit; criticized loans down Criticized loans down 10%; NCOs down 57% QoQ; NPA steady at 0.61% Improving
Hiring/productivityFrontline hiring ramping; specialized C&I verticals (health care, project finance, structured finance) Senior RM hires; new team added; supports loan production Building momentum

Management Commentary

  • “Net interest income grew a robust 8% quarter-over-quarter… positive operating leverage and lower credit costs contributed to the strong earnings growth” — Kevin S. Kim, CEO .
  • “The cost of average interest bearing deposits… declined by eight basis points… renewal of CDs at lower rates provides a tailwind” — Julianna Balicka, CFO .
  • “Criticized loans declined $42 million, or 10% quarter over quarter… net charge-offs totaled $5 million… down 57%” — CFO .
  • “We hired a seasoned commercial banking team… expect sequential positive operating leverage in 4Q25… efficiency ratio improvement” — CEO .

Q&A Highlights

  • Deposit metrics: end-Sept spot total deposit rate 2.82%; IB deposits 3.62%; average margin in Sept 2.96% .
  • Purchase accounting accretion: loan accretion was ~$5MM in Q3; other items minimal .
  • CDs: ~$2.3B maturing in Q4 at a 4.08% average rate; new CDs priced near/below 4% .
  • SBA program: Government shutdown halted new SBA 7(a) secondary market; loans already approved unaffected; preparing pipeline for resumption .
  • Territorial conversion: systems conversion targeted by end of next year; cost saves more from executive comp than core systems .

Estimates Context

  • EPS: SPGI consensus $0.2575* vs normalized actual $0.25 — small miss, driven by lower SBA gains and higher compensation (noninterest expense ex-notables up QoQ) .
  • Revenue: SPGI consensus $138.9MM* vs SPGI actual $130.1MM*, a miss; note company-reported revenue was $142.0MM (net interest income before provision + noninterest income), highlighting definitional differences .

  • of estimates: EPS (4), Revenue (3). Target price consensus $12.38.

Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

  • Margin tailwinds are intact: funding costs are declining (spot rates and CD repricing), supporting continued NIM expansion into Q4 .
  • Credit normalization is advancing: criticized loans and NCOs improved materially, reducing provision pressure while reserves remain solid at 1.05% coverage .
  • Deposit mix optimization is working: noninterest demand rose QoQ; brokered deposits reduced 18% QoQ, enhancing franchise funding profile .
  • Territorial accretion provides a steady EPS lever (~$5MM accretion in Q3) and durable low-cost deposits; system conversion timeline is clear .
  • Near-term optics: modest EPS miss vs SPGI and revenue definitional gap may cap immediate upside; focus on Q4 positive operating leverage and efficiency ratio improvement .
  • Trading view: Watch CD rollover cadence and deposit betas for incremental NIM expansion; SBA market resumption can lift fee income; any signs of CRE credit resolution would be stock-supportive .
  • Medium-term thesis: A better-funded, more diversified balance sheet (Territorial), ongoing talent investments, and improving cost discipline support ROTCE expansion and dividend sustainability at $0.14 per quarter .