Hope Bancorp, Inc. Q2 FY2026 earnings call

• Overall Financial Results

  • Delivered strong Q2 2026 results, with diluted EPS of 26 cents reported, and 27 cents excluding notable items (up 17% sequentially and 40% year-over-year)
  • Reported 5% sequential revenue growth, 6 basis points of net interest margin expansion, and positive operating leverage, with all profitability ratios improving while loans and deposits grew
  • Capital position remains strong, with a common equity tier one ratio of 12.27% as of June 30 2026, supporting organic growth, the pending SMBC Manubank acquisition, and capital return to shareholders

• Capital Management

  • Year-to-date 2026, the company returned $45 million to shareholders via dividends and share repurchases; 773,000 shares repurchased for $9 million at an average price of $11.25 per share, with $27 million remaining under the existing $50 million repurchase authorization
  • The board declared a quarterly dividend of 14 cents per share, payable August 20 2026 to shareholders of record as of August 6 2026

• Pending SMBC Manubank Acquisition

  • Expected to close in H2 2026, subject to regulatory approval and customary closing conditions
  • Transaction will add approximately $2.3 billion in loans and $2.6 billion in deposits, expand middle market and multinational banking capabilities, grow core Southern California presence, and improve balance sheet quality
  • Includes a strategic partnership with SMBC to serve Japanese commercial and retail customers operating in the U.S., broadening the bank's multinational client reach

• Balance Sheet and Mix Optimization

  • Deposit mix continued to improve: growth in non-maturity deposits offset planned time deposit declines to reduce funding costs
  • The Hawaii-based Territorial Savings franchise, acquired in 2025, contributes lower-cost deposits, with year-to-date retail deposit growth of 6% in Hawaii

• Asset Quality

  • Asset quality remained broadly stable and improved year-over-year; criticized loans totaled $334 million (down 19% year-over-year) for a criticized loan ratio of 2.24% (improved 63 basis points year-over-year)
  • Non-performing assets were $113 million (0.59% of total assets), down from 0.65% at the end of Q1 2026; net charge-offs were $9 million (annualized 24 basis points of average loans), down from 29 basis points in Q1 2026
  • Allowance for credit losses totaled $153 million, equal to a 1.03% coverage ratio of loans receivable

This call does not break out performance into separate product segments. Overall consolidated financial results for Q2 2026 are: total revenue of $148 million; net interest income of $129 million (up 4% quarter-over-quarter, up 10% year-over-year); non-interest income of $19 million (up 11% quarter-over-quarter, up 19% year-over-year excluding notable items); non-interest expense of $98 million (up $4 million quarter-over-quarter, $96 million excluding merger-related costs, up 2% quarter-over-quarter); pre-provision net revenue of $49 million (up 6% sequentially, $51 million excluding notable items, up 10% quarter-over-quarter and 25% year-over-year); gross loans of $15 billion (up 2% quarter-over-quarter, 8% annualized, up 4% year-over-year); total deposits of $15.9 billion (up 1% quarter-over-quarter, 4% annualized); non-interest-bearing demand deposits up 5% quarter-over-quarter; time deposits declined 1% quarter-over-quarter as part of a planned mix optimization.

• Full year 2026 guidance is essentially unchanged from prior outlook
• End-of-period total loan growth is expected to be approximately 20%, including the Manubank loan balances
• Full year 2026 revenue growth (excluding notable items, including one quarter of Manubank contribution) is expected in the 15% to 20% range
• Pre-provision net revenue growth (excluding notable items, including one quarter of Manubank contribution) is expected in the 25% to 30% range
• Net interest margin is projected to see modest incremental expansion of a few basis points per quarter for the remainder of 2026, a slower pace than the 6 basis point expansion seen between Q1 and Q2 2026
• 2026 full-year net gains on SBA loan sales are projected to total $16 million to $17 million

• Deposit pricing remains highly competitive in the current market environment, which could pressure funding costs and limit further margin improvement
• The timing of the SMBC Manubank acquisition closing is dependent on regulatory approval, which may differ from the current expected H2 2026 timeline
• Deposit mix adjustment to reduce the share of higher-cost time deposits will take an extended period of time to reach target levels closer to industry norms

Q: Analyst Matthew Clark asked for the end-of-June spot deposit rates, an outlook for deposit costs, and commentary on SBA loan sale performance for the full year. / A: The end-of-June spot deposit rate was 2.58%, or 3.32% for interest-bearing deposits, and the June net interest margin was 2.98%. Management expects continued small basis point quarterly margin expansion for the rest of 2026, driven by ongoing CD portfolio repricing. SBA loan sale premiums remain healthy in the mid-to-high single digits, and full-year 2026 SBA gain on sales are projected to come in at $16 million to $17 million. Management will maintain a balanced approach between gain on sale economics and portfolio retention.

Q: Analyst Gary Tenner asked for the long-term target for time deposit mix reduction, and the relative deposit pricing of the Hawaii franchise compared to mainland U.S. deposits. / A: Management has no specific near-term target, and the company will gradually reduce the share of higher-cost time deposits over time, aligning the mix closer to industry averages. Acquisitions including Territorial Bancorp and the pending Manubank transaction will add new lower-cost deposit sources to support this shift. Management confirmed that Hawaii deposit costs are materially lower than mainland U.S. deposit costs.

Q: Analyst Kelly Mata asked for an updated timeline for the Manubank closing, what contribution is assumed in guidance, current incremental new deposit costs, and drivers of the strong quarter for non-interest-bearing deposit growth. / A: The transaction remains on track to close in H2 2026, with timing ultimately dependent on regulatory approval. Guidance assumes one quarter of Manubank contribution to full year 2026 results. Incremental new interest-bearing deposit costs currently range from 3.50% to 3.80%, with time deposits at the higher end of the range and money market deposits at the lower end. A one-time inflow of tariff refund funds to commercial and small business customers was a key driver of the quarter's strong non-interest-bearing deposit growth.

Q: Analyst Tim Coffey asked about loan origination activity, new loan yields, and whether the company will continue share repurchases through the Manubank closing. / A: Loan origination was robust in Q2, and the pipeline for Q3 remains solid; management prioritizes relationship economics, credit structure, and quality over headline loan growth. New loan yields ranged from ~6%+ for commercial real estate to nearly 8% for SBA loans, with an average new yield of ~6.25%, all higher than the bank's average existing loan yield. Management confirmed it has an existing 10b5-1 plan in place to continue share repurchases through the transaction closing.