Hope Bancorp (NASDAQ:HOPE) executives said the company finished 2025 with “strong earnings growth” in the fourth quarter, highlighting higher net interest income, stronger customer fee income, and improving credit metrics, while also pointing to ongoing investments in personnel and capabilities to support growth in 2026.
Fourth-quarter earnings and capital actions
Chairman, President and CEO Kevin Kim said net income totaled $34 million, up 42% from the prior quarter. Management attributed the quarter-over-quarter increase to growth in net interest income, strength in customer fee income, a lower provision for credit losses, and lower tax expense, partially offset by higher operating expense.
On capital returns, Kim said the board declared a quarterly common stock dividend of $0.14 per share, payable on or around February 20 to stockholders of record as of February 6, 2026. He also said the board reinstated its prior share purchase authorization, with $35 million still available.
Balance sheet: loan growth, deposits, and brokered funding
Kim said gross loans ended the quarter at $14.8 billion, up 1% from the prior quarter and up 8% year-over-year, reflecting the impact of the Territorial acquisition and organic residential mortgage growth. He added that fourth-quarter 2025 loan production volumes rose 39% relative to the prior quarter, describing improved momentum throughout 2025.
Deposits totaled $15.6 billion at December 31, 2025, up 9% year-over-year primarily due to the acquisition and down 1% from September 30. Kim attributed the sequential decline largely to “typical fourth quarter fund movements in certain communities.” He said the company’s deposit strategy is centered on building a durable deposit base by expanding primary customer relationships and improving funding efficiency through mix management and pricing discipline.
Kim also noted brokered deposits declined 15% year-over-year.
Net interest income and margin trends
Chief Financial Officer Julianna Balicka said net interest income was $127 million in the fourth quarter of 2025, up 1% from the third quarter and up 25% from the year-ago quarter. Net interest margin (tax-equivalent) was 2.90%, up 1 basis point from the third quarter, as improvements in funding costs more than offset pressure from lower earning asset yields.
Balicka said that, reflecting the impact of Federal Reserve rate cuts, average loan yield declined 12 basis points from the previous quarter, while the cost of average interest-bearing deposits decreased 17 basis points.
Looking ahead, Balicka said the company expects two balance sheet tailwinds in 2026:
- “Upward repricing” of maturing five-year commercial real estate loans to current market rates
- Downward repricing of time deposits
Fee income growth and expenses
Balicka said the company posted growth across multiple fee income lines in the quarter, with customer-level swap fees described as a highlight. She said management has focused on improving fee income execution to diversify revenue, noting that customer-level swap fees were $6 million for the full year 2025, up 270% from $1.6 million in 2024.
Balicka also discussed SBA loan sales activity. The company sold $46 million of SBA loans during the fourth quarter, compared with $48 million in the third quarter. SBA gain on sale was $2.6 million for the fourth quarter versus $2.8 million in the third.
On expenses, Balicka said non-interest expense was $99 million in the fourth quarter, up from $97 million in the third quarter. She attributed the sequential increase mainly to compensation-related costs associated with hiring to support strategic initiatives and revenue-generating capabilities. Year over year, non-interest expense rose from $78 million, which Balicka said included the addition of Territorial Savings Bank operating expenses.
The efficiency ratio was 68% in the fourth quarter, which Balicka said was essentially stable from the prior quarter as revenue growth absorbed incremental investments.
Credit performance improves; 2026 outlook and medium-term targets
Balicka said criticized loans were $351 million at December 31, down 6% from the prior quarter and down 22% year over year. The criticized loan ratio improved to 2.39% of loans, compared with 2.56% at September 30, 2025 and 3.30% at December 31, 2024. She noted the sequential improvement included a 48% linked-quarter decrease in C&I special mention loans.
Net charge-offs were $3.6 million, or an annualized 10 basis points of average loans, compared with $5.1 million (annualized 14 basis points) in the third quarter. Provision for credit losses was $7.2 million, down from $8.7 million in the third quarter, which Balicka said primarily reflected lower net charge-offs and a linked-quarter change in the allowance for unfunded commitments.
The allowance for credit losses totaled $157 million at quarter end, up from $152.5 million at September 30, and the allowance coverage ratio was 1.07% of loans receivable, up from 1.05%.
In prepared outlook comments, management said 2026 results are expected to build on momentum from the second half of 2025 and benefit from frontline hiring completed throughout the year. The company’s outlook assumes two Fed funds target rate cuts of 25 basis points each in June and September 2026, “in line with the current forward interest rate curve.” Management also reiterated expectations for a net interest margin tailwind from time deposit repricing and commercial real estate loan repricing.
Management said its outlook for year-over-year pre-provision net revenue growth, excluding notable items, is 25% to 30%. The company also referenced an expected full-year effective tax rate of 20% to 25%.
In discussing medium-term goals, management reiterated a return on average assets target of approximately 1.2%, supported by loan growth in the high single digits and normalized annual revenue growth above 10%. The company also reiterated an efficiency ratio target in the mid-50% range over the medium term, which management said would depend on sustained revenue growth, disciplined expense management, and operational improvements.
During the Q&A, management said it does not separately disclose purchase accounting accretion. Executives provided additional color on deposit costs, including a “spot rate on total deposits” of 2.68% as of December 31, 2025, and said lower deposit costs are expected to be supported by time deposit repricing, pricing adjustments on non-maturity deposits following Fed funds cuts, and an anticipated improvement in deposit mix driven by treasury management investments.
Management also said it expects $6.3 billion of CDs to reprice in 2026. In discussing rates, the company noted that new branch CD “roll-on” rates had been in the 3.75% to 3.80% range (after correcting an earlier reference). Regarding Hawaii, management said its 2025 focus was integration and adding resources as needed, and it did not see meaningful deposit fluctuations during the transition period.
About Hope Bancorp (NASDAQ:HOPE)
Hope Bancorp, Inc operates as the bank holding company for Hope Bank, a California-chartered financial institution serving small and middle-market businesses, professionals and affluent individuals. The company’s principal activities include accepting a variety of deposit products—such as checking accounts, savings and money market accounts, and time deposits—and extending commercial credit facilities. With a focus on community banking, Hope Bancorp tailors its offerings to meet the needs of clients in diverse industries, including real estate, professional services and import/export trade.
In its lending business, Hope Bancorp provides commercial real estate loans, construction financing, working capital lines of credit and equipment financing.
