HOPE BANCORP INC Q1 FY2025 earnings call

• Net income for Q1 2025 was $21.1M or $0.17 per diluted share, excluding notable items it was $22.9M or $0.19 per share. • Net interest income after provision expense was $96M, up 4% QoQ. • Noninterest expense excluding notable items increased QoQ due to typical first quarter increases. • Received regulatory approvals for the merger of Territorial Bancorp, which closed on April 2, 2025, with Territorial bringing in $1.7B in deposits and $1B in loans. • Strong capital ratios expanded QoQ and YoY. • Focused on strengthening deposit mix; total deposits at $14.5B, up 1% QoQ. • Loans receivable at $13.3B, down 2% YoY, with residential mortgage loans up 7% QoQ. • Asset quality stable with nonperforming assets down 8% QoQ. • Territorial merger details: ~$87M in cash, $531M in investment securities sold, FHLB borrowings managed, preliminary loan portfolio discount updated, and onetime acquisition-related expenses expected in Q2 2025.

For the first quarter of 2025, net income was $21.1 million or $0.17 per diluted common share; excluding notable items, it was $22.9 million or $0.19 per diluted common share. Net interest income after provision expense was $96 million, up 4% quarter-over-quarter from $92 million in the fourth quarter of 2024. Noninterest expense, excluding notable items of $81.3 million, increased quarter-over-quarter due to typical first quarter increases in salary and employee benefits expense. The merger of Territorial Bancorp was completed on April 2, 2025, with Territorial contributing approximately $1.7 billion of stable low-cost deposits and approximately $1 billion after accounting discounts of residential mortgage loans.

• Expect 2025 loan growth at high single-digit percentage rate, lower than previous range. • Net interest income growth now expected in high single-digit percentage range, down from prior low double-digit. • Noninterest income expected to grow in mid-25% range, up from previous mid-teen. • Noninterest expense outlook unchanged at low double-digit percentage growth, excluding notable items.

• Macroeconomic volatility and increasing probabilities of a recession. • Geopolitical tensions impacting loan demand and utilization. • Market pricing competition and spread compression potentially affecting net loan growth. • Potential credit concerns on loan renewals.

Q: How would the high single-digit NII growth outlook change if there are less than three rate cuts assumed, and what's the annual impact of each 25 basis point rate cut?

A: If fewer rate cuts than assumed, there would be a somewhat modest downward impact as offsetting effects of rate cuts on floating rate loans and deposit costs net-net wash with a slight downward shift.

Q: Can you provide detail on the loan verticals expecting moderate organic growth and insights from client conversations?

A: Loan growth is expected in Korean subsidiary sectors and specialized commercial lending verticals like healthcare, project finance, structured finance, with new hires strengthening these pipelines.

Q: Remind us the specific NIM impact of each 25 basis point cut all else equal and any credit color?

A: All else equal, each 25 basis point cut slightly shifts downward with net-net washing out, but precise basis points not provided. Asset quality remains stable with proactive portfolio monitoring due to tariff environment, but borrowers are diversifying supply chains to mitigate potential impact.