HOPE BANCORP INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

Hope Bancorp, Inc. (“Hope Bancorp” on a parent-only basis and the “Company” on a consolidated basis), headquartered in Los Angeles, California, is the holding company for Bank of Hope (the “Bank”). At June 30, 2025, the Bank operates 46 full-service branches andnine loan production offices in California, New York, New Jersey, Washington, Texas, Illinois, Georgia, Alabama, Florida, Colorado and Oregon under the Bank of Hope banner,29 branches in Hawaii under the trade name Territorial Savings, as well a representative office in Seoul, South Korea. The Company is a corporation organized under the laws of the state of Delaware and a bank holding company registered under the Bank Holding Company Act of 1956, as amended.

The Consolidated Financial Statements included herein have been prepared without an audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), except for the Consolidated Statement of Financial Condition at December 31, 2024, which was from the audited financial statements included in the Company’s 2024 Annual Report on Form 10-K. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such SEC rules and regulations.

The Consolidated Financial Statements include the accounts of Hope Bancorp and its wholly owned subsidiaries, principally the Bank. All intercompany transactions and balances have been eliminated in consolidation. The Company has made all adjustments, that, in the opinion of management, are necessary to fairly present the Company’s financial position at June 30, 2025 and December 31, 2024, and the results of operations for the three and six months ended June 30, 2025 and 2024. Certain reclassifications have been made to prior period amounts to conform to the current year presentation, and did not have an impact on the prior year net income or stockholders’ equity. The results of operations for the interim periods are not necessarily indicative of results to be anticipated for the full year.

The preparation of Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.

These unaudited Consolidated Financial Statements should be read along with the audited Consolidated Financial Statements and accompanying Notes included in the Company’s 2024 Annual Report on Form 10-K.

Significant Accounting Policies

The Company’s accounting policies are described in Note 1 - “Summary of Significant Accounting Policies”, of its audited consolidated financial statements included in its 2024 Annual Report Form 10-K. Significant changes to accounting policies from those disclosed in the Company’s audited consolidated financial statements included in its 2024 Annual Report Form 10-K are presented below.

Business Combinations—The Company accounts for business combinations using the purchase method of accounting in accordance with FASB ASC Topic 805, Business Combinations, which requires assets acquired and liabilities assumed to be recognized at fair value as of the acquisition date. The excess of purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Significant estimates and judgements are involved in the fair valuation and purchase price allocation process.

On April 2, 2025, the Company completed the acquisition of Territorial Bancorp Inc., a Maryland corporation (“Territorial”) and its wholly owned subsidiary, Territorial Savings Bank, headquartered in Honolulu, Hawaii, in accordance with the Agreement and Plan of Merger (the “Merger Agreement”) by and between the Company and Territorial entered into on April 26, 2024. Under the Merger Agreement, Territorial merged with and into the Company, with the Company continuing as the surviving entity (the “Merger”). Pursuant to the Merger Agreement, Territorial shareholders had the right to receive 0.8048 shares of Hope Bancorp common stock in exchange for each share of Territorial common stock they own. The legacy Territorial franchise in Hawaii continues to operate under the trade name Territorial Savings, a division of Bank of Hope. See Note 16 - “Business Combinations” for additional information regarding the Merger.

2. Investment Securities

The following is a summary of investment securities as of the dates indicated:

The Company has elected to exclude accrued interest from the amortized cost of its investment debt securities. Accrued interest receivable for investment debt securities at June 30, 2025 and December 31, 2024, totaled $8.7 million and $7.6 million, respectively, and was included in accrued interest receivable on the Consolidated Statements of Financial Condition.

At June 30, 2025 and December 31, 2024, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.

Investments AFS and HTM of$18.5 million and$516.7 million, respectively, were acquired as part of the Merger with Territorial on April 2, 2025, and, immediately upon Merger, all of the acquired investments were categorized as AFS according to management intent and sold. The investment securities were sold at a market value of$535.2 million, with no gain or loss impact on the Consolidated Statements of (Loss) Income. See Note 16 - “Business Combinations” for additional information regarding the Merger with Territorial.

As part of a strategic repositioning, in June 2025, the Company sold a portion of its legacy investment securities portfolio AFS with a fair value of$417.9 million, consisting of lower-yielding collateralized mortgage obligations, mortgage-backed, corporate, and municipal securities, and recorded realized losses of$38.9 million. Net proceeds from these sales were redeployed to purchase higher-yielding investment securities AFS.

The table below summarizes the proceeds from and gains and losses on the sales of investment securities AFS, for the periods presented below.

At June 30, 2025 and December 31, 2024, $151.6 million and $210.5 million in unrealized losses on investment securities AFS, net of taxes, respectively, were included in accumulated other comprehensive loss.

The following table presents a breakdown of interest income recorded for investment securities that are taxable and nontaxable.

The amortized cost and estimated fair value of investment securities at June 30, 2025, by contractual maturity, are presented in the table below. Collateralized mortgage obligations, mortgage-backed securities, and asset-backed securities are presented by final maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties.

Securities with carrying values of approximately $319.1 million and $219.4 million at June 30, 2025 and December 31, 2024, respectively, were pledged to secure public deposits, for various borrowings, and for other purposes as required or permitted by law.

The following tables show the Company’s investments’ gross unrealized losses and estimated fair values, aggregated by investment category and the length of time that the individual securities have been in a continuous unrealized loss position as of the dates indicated. The length of time that the individual securities have been in a continuous unrealized loss position is not a factor in determining credit impairment with the adoption of current expected credit losses (“CECL”).

The Company had collateralized mortgage obligations, mortgage-backed, corporate, and municipal securities classified as AFS that were in a continuous loss position for twelve months or longer at June 30, 2025. The collateralized mortgage obligations, and mortgage-backed securities were investments in U.S. Government agency and U.S. Government sponsored enterprises and have high credit ratings (“AA” grade or better). The interest on corporate and municipal securities that were in an unrealized loss position has been paid as agreed, and the Company believes this will continue in the future and that the securities will be paid in full as scheduled. The market value declines for these securities were primarily due to movements in interest rates and are not reflective of management’s expectations of the Company’s ability to fully recover any unrealized losses, which may be at maturity. Under CECL, the length of time that the fair value of investment securities has been less than amortized cost is not considered when assessing for credit impairment.

87.5% of the Company’s investment portfolio at June 30, 2025, consisted of securities that were issued by U.S. Government agency and U.S. Government sponsored enterprises. Although a government guarantee exists on securities issued by U.S. Government sponsored agencies, these entities are not legally backed by the full faith and credit of the federal government, and the current support is subject to a cap as part of the Housing and Economic Recovery Act of 2008. Nonetheless, at this time the Company does not foresee any set of circumstances in which the government would not fund its commitments on these investments as the issuers are an integral part of the U.S. housing market in providing liquidity and stability. Therefore, the Company concluded that a zero allowance approach for these investments was appropriate. The Company also hadthree asset-backed securities, five corporate securities, and 37 municipal bonds in unrealized loss positions at June 30, 2025. The Company performed an assessment of investments in unrealized loss positions for credit impairment and concluded thatno allowance for credit losses was required at June 30, 2025.

Allowance for Credit Losses on Securities Available for Sale—The Company evaluates investment securities AFS in unrealized loss positions for impairment related to credit losses on at least a quarterly basis. Investment securities AFS in unrealized loss positions are first assessed as to whether the Company intends to sell, or if it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If one of the criteria is met, the security’s amortized cost basis is written down to fair value through earnings. For securities that do not meet these criteria, the Company evaluates whether the decline in fair value resulted from credit losses or other factors. In evaluating whether a credit loss exists, the Company has set up an initial quantitative filter for impairment triggers. Once the quantitative filter has been triggered, a security is placed on a watch list and an additional assessment is performed to identify whether a credit impairment exists. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security and the issuer, among other factors. If this assessment indicates that a credit loss exists, the Company compares the present value of cash flows expected to be collected from the security with the amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Unrealized losses that have not been recorded through an allowance for credit losses are recognized in other comprehensive income, net of applicable taxes. The Company didnot have an allowance for credit losses on investment securities AFS at June 30, 2025 and December 31, 2024.

Allowance for Credit Losses on Securities Held to Maturity—For each major HTM debt security type, the allowance for credit losses is estimated collectively for groups of securities with similar risk characteristics. For securities that do not share similar risk characteristics, the losses are estimated individually. Debt securities that are issued by a U.S. government agency or government-sponsored enterprises are highly rated by major rating agencies, and have a long history of no credit losses. Therefore, the Company applies a zero credit loss assumption on these investments. Any expected credit loss is recorded through the allowance for credit losses on investment securities HTM and deducted from the amortized cost basis of the security, so that the balance sheet reflects the net amount the Company expects to collect. At June 30, 2025, all of the Company’s investment securities HTM were issued by a U.S. government agency or government-sponsored enterprises. The Company didnot have an allowance for credit losses on investment securities HTM at June 30, 2025 and December 31, 2024.

3. Equity Investments

Equity investments with readily determinable fair values at June 30, 2025 and December 31, 2024, consisted of mutual funds in the amounts of $50.5 million and $4.3 million, respectively, and were included in equity investments on the Consolidated Statements of Financial Condition.

During the three and six months ended June 30, 2025, the Company purchased $127 thousand and $45.5 million, respectively in equity investments with readily determinable fair values, consisting of Community Reinvestment Act (“CRA”) mutual funds. There wereno equity investments with readily determinable fair values that were purchased during the same periods of 2024.

The net gains recognized from changes in fair value for equity investments with readily determinable fair values for the three and six months ended June 30, 2025, totaled $117 thousand and $743 thousand, respectively, and were recorded in other noninterest income and fees in the Consolidated Statements of (Loss) Income. The net losses recognized from changes in fair value for equity investments with readily determinable fair values for the three and six months ended June 30, 2024, totaled $19 thousand and $65 thousand, respectively.

At June 30, 2025 and December 31, 2024, the Company also had equity investments without readily determinable fair values, which were carried at cost less any determined impairment. The balance of these investments was adjusted for changes in subsequent observable prices. At June 30, 2025, the total balance of equity investments without readily determinable fair values included in equity investments on the Consolidated Statements of Financial Condition was $37.6 million, consisting of $370 thousand in correspondent bank stock, $1.0 million in Community Development Financial Institutions (“CDFI”) investments, and $36.2 million in CRA investments. At December 31, 2024, the total balance of equity investments without readily determinable fair values was $35.6 million, consisting of $370 thousand in correspondent bank stock, $1.0 million in CDFI investments, and $34.2 million in CRA investments.

The Company hadno impairments or subsequent observable price changes for equity investments without readily determinable fair values for the three and six months ended June 30, 2025 and 2024.

4. Loans Receivable and Allowance for Credit Losses

The following is a summary of loans receivable by segment:

Loans receivable is stated at the amount of unpaid principal, adjusted for net deferred fees and costs, premiums and discounts, and purchase accounting fair value adjustments. The Company had net deferred costs of $1.4 million and net deferred fees of $241 thousand at June 30, 2025 and December 31, 2024, respectively.

The loan portfolio consists offour segments: CRE loans, C&I loans, residential mortgage loans, and consumer and other loans. CRE loans are extended for the purchase and refinance of commercial real estate and are generally secured by first deeds of trust and collateralized by multifamily residential or commercial properties. C&I loans are loans provided to businesses for various purposes such as working capital, purchasing inventory, debt refinancing, business acquisitions, international trade finance activities, and other business-related financing needs. CRE and C&I loans also include Small Business Administration (“SBA”) loans. Residential mortgage loans are extended for personal, family, or household use and are secured by a first mortgage or deed of trust. Consumer and other loans consist of home equity, credit card, and other personal loans.

The Company had loans receivable of $14.43 billion at June 30, 2025, an increase of $816.5 million, or 6.0%, from December 31, 2024. The increase in loans receivable during the six months ended June 30, 2025, was primarily due to the $1.07 billion in loans added from the Merger with Territorial during the quarter ended June 30, 2025. See Note 16 - “Business Combinations” for additional information regarding the Merger.

The Company had $12.1 million in loans held for sale at June 30, 2025, compared with $14.5 million at December 31, 2024. Loans held for sale at June 30, 2025, consisted of $4.7 million in C&I loans, $1.1 million in residential mortgage loans, and $6.3 million in other consumer loans comprising the Company’s legacy credit card portfolio. Loans held for sale are not included in the loans receivable table presented above.

The tables below detail the activity in the allowance for credit losses (“ACL”) by portfolio segment for the three and six months ended June 30, 2025 and 2024.

The following tables break out the allowance for credit losses and loan balance by measurement methodology at June 30, 2025 and December 31, 2024:

At June 30, 2025 and December 31, 2024, reserves for unfunded loan commitments recorded in other liabilities were $3.3 million and $2.7 million, respectively. For the three and six months ended June 30, 2025, the Company recorded an addition to reserves for unfunded commitments of $1.0 million and $600 thousand, respectively. For the three and six months ended June 30, 2024, the Company recorded a reduction to reserves for unfunded commitments of $300 thousand and $1.3 million, respectively.

Generally, loans are placed on nonaccrual status if principal and/or interest payments become 90 days or more past due, and/or management deems the collectability of the principal and/or interest to be in question, as well as when required by regulatory requirements. Loans to customers whose financial conditions have deteriorated are considered for nonaccrual status whether or not the loan is 90 days or more past due. Generally, payments received on nonaccrual loans are recorded as principal reductions. Loans are returned to accrual status only when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The Company does not recognize interest income while loans are on nonaccrual status.

The tables below represent the amortized cost of nonaccrual loans, as well as loans past due 90 or more days and still on accrual status, by loan segment and broken out by loans with a recorded ACL and those without a recorded ACL, at June 30, 2025 and December 31, 2024.

(1) Total nonaccrual loans exclude the guaranteed portion of SBA loans that are in liquidation totaling $15.3 million and $12.8 million, at June 30, 2025 and December 31, 2024, respectively.

The following table presents the amortized cost of collateral-dependent loans at June 30, 2025 and December 31, 2024:

Collateral on loans is a significant portion of what secures collateral-dependent loans and significant changes to the fair value of the collateral can potentially impact ACL. During the six months ended June 30, 2025, the Company did not have any significant changes to the extent to which collateral secured its collateral-dependent loans, due to general deterioration or from other factors. At June 30, 2025 and December 31, 2024, real estate collateral securing CRE and C&I loans consisted of commercial real estate properties including hotel/motel, building, office, restaurant, land, gas station, warehouse, mixed-use and multifamily properties and real estate collateral securing residential mortgage loans consisted of underlying residential mortgage loan homes. Collateral dependent loans secured by other collateral at June 30, 2025 and December 31, 2024 consisted of loans secured by accounts receivables, inventory, tax credits, and underlying businesses.

Accrued interest receivable on loans totaled $44.1 million at June 30, 2025, and $43.0 million at December 31, 2024. The Company has elected to exclude accrued interest receivable in its estimates of expected credit losses because the Company writes off uncollectible accrued interest receivable in a timely manner. The Company considers writing off accrued interest amounts once the amounts become 90 days past due to be considered within a timely manner. The Company writes off accrued interest receivable by reversing interest income. The following table presents interest income reversals, due to loans being placed on nonaccrual status, by loan segment for the three and six months ended June 30, 2025 and 2024:

The following table presents the amortized cost of past due loans, including nonaccrual loans past due 30 or more days, by the number of days past due at June 30, 2025 and December 31, 2024, by loan segment:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including, but not limited to, current financial information, historical payment experience, credit documentation, public information, and current economic trends. Homogeneous loans (i.e., home mortgage loans, home equity lines of credit, overdraft loans, express business loans, and automobile loans) are not risk rated and credit risk is analyzed largely by the number of days past due. This analysis is performed at least on a quarterly basis.

The definitions for risk ratings are as follows:

•Pass: Loans that meet a preponderance or more of the Company’s underwriting criteria and evidence an acceptable level of risk.

•Special Mention: Loans that have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

•Substandard: Loans that are inadequately protected by the current net worth and paying capacity of the borrower or by the collateral pledged, if any. Loans in this classification have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

•Doubtful: Loans that have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The following tables present the amortized cost basis of loans receivable by segment, risk rating, and year of origination, renewal, or major modification at June 30, 2025 and December 31, 2024.

For the twelve months ended December 31, 2024, there were no revolving loans converted to term loans.

The Company may reclassify loans held for investment to loans held for sale in the event that the Company plans to sell loans that were originated with the intent to hold to maturity. Loans transferred from held for investment to held for sale are carried at the lower of cost or fair value. The breakdown of loans by segment that were reclassified from held for investment to held for sale for the three and six months ended June 30, 2025 and 2024, is presented in the following table:

The Company calculates its ACL by estimating expected credit losses on a collective basis for loans that share similar risk characteristics. Loans that do not share similar risk characteristics with other loans are evaluated for credit losses on an individual basis. The Company differentiates its loan segments based on shared risk characteristics for which allowance for credit losses is measured on a collective basis.

The Company uses a combination of a modeled and non-modeled approach that incorporates current and future economic conditions to estimate lifetime expected losses on a collective basis. The Company uses Probability of Default (“PD”), Loss Given Default (“LGD”), and Exposure at Default (“EAD”) methodologies with quantitative factors and qualitative considerations in the calculation of the allowance for credit losses for collectively assessed loans. The Company uses a reasonable and supportable period oftwo years, at which point loss assumptions revert back to historical loss information by means of aone-year reversion period. Included in the quantitative portion of the ACL analysis are inputs such as borrowers’ net operating income, debt coverage ratios, real estate collateral values, as well as factors that are more subjective or require management’s judgment, including key macroeconomic variables from Moody’s forecast scenarios such as GDP, unemployment rates, interest rates, and CRE prices. These key inputs are utilized in the Company’s models to develop PD and LGD assumptions used in the calculation of estimated quantitative losses.

The ACL for the Company’s construction, credit card, and certain consumer loans is calculated based on a non-modeled approach that utilizes historical loss rates to estimate losses. A non-modeled approach was chosen for these loans as fewer data points exist, which could result in high levels of estimated loss volatility under a modeled approach. In the aggregate, non-modeled loans represented approximately 1% of the Company’s total loan portfolio at June 30, 2025.

The Company’s Economic Forecast Committee (“EFC”) reviews economic forecast scenarios that are incorporated in the Company’s ACL. The EFC reviews multiple scenarios provided to the Company by an independent third party and chooses a single scenario that best aligns with management’s expectation of future economic conditions. At June 30, 2025, the Company utilized the June 2025 consensus economic forecast scenario from Moody’s, as it best aligned with management’s expectations of future conditions. The forecast projected GDP growth of 1.5% in 2025, 1.6% for 2026, and 2.1% for 2027, with unemployment projected to be 4.3% for 2025, 4.5% for 2026, and 4.3% in 2027. CRE prices in the consensus scenario were expected to show improvement by 2027, with the CRE price index projected to (contract) grow (0.2%) for 2025, (1.5%) for 2026, and 2.5% in 2027. The Company also utilized Moody’s December 2024 consensus economic forecast for the calculation of the December 31, 2024 ACL.

In order to quantify the credit risk impact of other trends and changes within the loan portfolio, the Company utilizes qualitative adjustments to the modeled and non-modeled estimated loss approaches. The parameters for making adjustments are established under a Credit Risk Matrix that provides different possible scenarios for each of the factors below. The Credit Risk Matrix and the possible scenarios enable the Bank to qualitatively adjust the Loss Migration Ratio by as much as 25 basis points for each loan type pool. This matrix considers the following seven factors, which are patterned after the guidelines provided under the Interagency Policy Statement on the Allowance for Credit Losses:

•Changes in lending policies and procedures, including underwriting standards and collection, charge off, and recovery practices;

•Changes in the nature and volume of the loan portfolio;

•Changes in the experience, ability, and depth of lending management and staff;

•Changes in the trends of the volume and severity of past due loans, classified loans, nonaccrual loans, and other loan modifications;

•Changes in the quality of the loan review system and the degree of oversight by the management and the Board of Directors;

•The existence and effect of any concentrations of credit, and changes in the level of such concentrations; and

•The effect of external factors, such as competition, legal requirements, and regulatory requirements on the level of estimated losses in the loan portfolio.

For loans that do not share similar risk characteristics such as nonaccrual loans above $1.0 million, the Company evaluates these loans on an individual basis in accordance with ASC 326. Such nonaccrual loans are considered to have different risk profiles than performing loans and are therefore evaluated individually. The Company elected to collectively assess nonaccrual loans with balances below $1.0 million along with the performing and accrual loans, in order to reduce the operational burden of individually assessing small nonaccrual loans with immaterial balances. For individually assessed loans, the ACL is measured using either 1) the present value of future cash flows discounted at the loan’s effective interest rate; 2) the loan’s observable market price; or 3) the fair value of the collateral, if the loan is collateral-dependent. For the collateral-dependent loans, the Company obtains a new appraisal to determine the fair value of collateral. The appraisals are based on an “as-is” valuation. To ensure that appraised values remain current, the Company either obtains updated appraisals every twelve months from a qualified independent appraiser or an internal evaluation of the collateral is performed by qualified personnel. If the third-party market data indicates that the value of the collateral property has declined since the most recent valuation date, management adjusts the value of the property downward to reflect current market conditions. If the fair value of the collateral is less than the amortized balance of the loan, the Company recognizes an ACL with a corresponding charge to the provision for credit loss on loans.

The Company maintains a separate ACL for its off-balance-sheet unfunded loan commitments. The Company uses an estimated funding rate to allocate an allowance to undrawn exposures. This funding rate is used as a credit conversion factor to capture how much undrawn lines of credit can potentially become drawn at any point. The funding rate is determined based on a look-back period of eight quarters. Credit loss is not estimated for off-balance-sheet credit exposures that are unconditionally cancellable by the Company.

Loan Modifications to Borrowers Experiencing Financial Difficulty

The tables below present the amortized cost of loans modified to borrowers experiencing financial difficulty for the periods presented, disaggregated by loan class and type of modification.

The following tables describe the financial effect of the loan modifications made to borrowers experiencing financial difficulty for the periods presented:

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The Company had no loans that were modified within the 12 months ended June 30, 2025, and that experienced a payment default during the three months ended June 30, 2025. The Company hadone loan totaling $2.5 million that was modified through a payment delay within the 12 months ended June 30, 2025, and that experienced a payment default during the six months ended June 30, 2025.

All loans that were modified within the 12 months ended June 30, 2024, to borrowers experiencing financial difficulty were current at June 30, 2024. There wereno loan modifications to borrowers experiencing financial difficulty that had payment defaults during the three and six months ended June 30, 2024, and that were modified in the 12 months prior to default.

5. Goodwill, Intangible Assets, and Servicing Assets

Goodwill

The carrying amount of the Company’s goodwill at June 30, 2025, and December 31, 2024, was $478.1 million and $464.5 million, respectively. The Company recorded goodwill of $13.7 million as a result of the Merger with Territorial on April 2, 2025. There wasno impairment of goodwill recorded during the three and six months ended June 30, 2025. See Note 16 - “Business Combinations” for additional information regarding the Merger.

Goodwill and other intangible assets generated from business combinations and deemed to have indefinite lives are not subject to amortization and instead are tested for impairment annually at the reporting unit level unless a triggering event occurs thereby requiring an updated assessment. Goodwill represents the excess of the purchase price over the sum of the estimated fair values of the tangible and identifiable intangible assets acquired less the estimated fair value of the liabilities assumed. Impairment exists when the carrying value of the goodwill exceeds the fair value of the reporting unit.

At December 31, 2024, the Company performed a qualitative assessment to test for impairment and management has concluded that there was no impairment. There were no triggering events during the quarter ended June 30, 2025, that indicated goodwill was more than likely impaired. As the Company operates as single business unit, goodwill impairment was assessed based on the Company as a whole.

Intangible Assets

A core deposit intangible asset of $46.5 million, representing 4.1% of core deposits, was recorded as part of the Merger with Territorial during the quarter ended June 30, 2025, and is scheduled to amortize for a period of 15 years ending in 2040. See Note 16 - “Business Combinations” for additional information regarding the Merger.

Amortization expense related to core deposit intangible assets totaled $1.2 million and $1.5 million for the three and six months ended June 30, 2025, respectively. Amortization expense related to core deposit intangible assets totaled $401 thousand and $802 thousand for the three and six months ended June 30, 2024, respectively. The following table provides information regarding the core deposit intangibles at June 30, 2025 and December 31, 2024:

Servicing Assets

Total servicing assets at June 30, 2025 totaled $11.8 million comprised $10.6 million in SBA servicing assets and $1.3 million in mortgage related servicing assets. At December 31, 2024, servicing assets totaled $10.1 million and comprised $8.6 million in SBA servicing assets and $1.5 million in mortgage related servicing assets.

Management periodically evaluates servicing assets for impairment based upon the fair value of the rights as compared to the carrying amount. Impairment is determined by stratifying rights into groupings based on loan type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. At June 30, 2025 and December 31, 2024, the Company did not have a valuation allowance on its servicing assets.

The changes in servicing assets for the three and six months ended June 30, 2025 and 2024, were as follows:

Loans serviced for others are not reported as assets. The principal balances of loans serviced for other institutions were $1.05 billion at June 30, 2025, and $975.0 million at December 31, 2024.

The Company utilizes the discounted cash flow method to calculate the initial excess servicing assets. The inputs used in evaluating servicing assets for impairment at June 30, 2025 and December 31, 2024, are presented below.

6. Deposits

Total deposits of $15.94 billion at June 30, 2025, were up $1.62 billion, or 11.3%, from $14.33 billion at December 31, 2024. The increase in deposits was primarily due to the $1.67 billion in deposits assumed from the Merger with Territorial during the quarter ended June 30, 2025. The Company recorded $147 thousand in net premium on time deposits at close of Merger, of which $60 thousand in net discounts remained at June 30, 2025. See Note 16 - “Business Combinations” for additional information regarding the Merger.

The aggregate amount of time deposits in denominations of more than $250 thousand at June 30, 2025 and December 31, 2024 was $3.30 billion and $2.71 billion, respectively. Included in time deposits of more than $250 thousand was $300.0 million in California State Treasurer’s deposits at June 30, 2025 and December 31, 2024. The California State Treasurer’s deposits are subject to withdrawal based on the State’s periodic evaluations. The Company is required to pledge eligible collateral of at least 110% of outstanding deposits. At June 30, 2025 and December 31, 2024, a letter of credit issued by the FHLB for $330.0 million and $150.0 million, respectively, and at December 31, 2024, securities with an aggregate fair value of $200.5 million were pledged as collateral for the California State Treasurer’s deposits. At June 30, 2025, certificates of deposit owned by state and local governments in Hawaii in amounts greater than or equal to $250,000 was $244.1 million, and was collateralized by investment securities with an aggregate fair value of $257.3 million.

Brokered deposits at June 30, 2025 and December 31, 2024, totaled $797.1 million and $1.06 billion, respectively. Brokered deposits at June 30, 2025, consisted of $475.9 million in money market and NOW accounts and $321.2 million in time deposit accounts. Brokered deposits at December 31, 2024, consisted of $527.1 million in money market and NOW accounts and $536.0 million in time deposit accounts.

The aggregate amount of unplanned overdrafts of demand deposits that were reclassified as loans was $3.3 million and $1.1 million at June 30, 2025 and December 31, 2024, respectively.

The following is a breakdown of the Company’s deposits at June 30, 2025 and December 31, 2024:

7. Borrowings

At June 30, 2025, borrowings totaled $29.8 million, compared with $239.0 million at December 31, 2024. All of the Company’s borrowings at June 30, 2025 and December 31, 2024, had maturities of less than 12 months. Borrowings at June 30, 2025 are net of discounts totaling $248 thousand and have a weighted average effective rate of 1.72%. The tables below summarize the Company’s borrowing lines at June 30, 2025 and December 31, 2024:

The Company maintains a line of credit with the FHLB of San Francisco as a secondary source of funds. The borrowing capacity with the FHLB is limited to the lower of either 25% of the Bank’s total assets or the Bank’s collateral capacity. The terms of this credit facility require the Company to pledge eligible collateral with the FHLB equal to at least 100% of outstanding advances. The Company’s available borrowing capacity decreased to $5.80 billion at June 30, 2025 from $5.96 billion at December 31, 2024, mainly due to an increase in FHLB issued letters of credit from $150.0 million at December 31, 2024 to $330.0 million at June 30, 2025. At June 30, 2025 and December 31, 2024, loans with a carrying amount of $7.45 billion and $7.58 billion were pledged at the FHLB for outstanding advances and remaining borrowing capacity, respectively. At June 30, 2025, in addition to FHLB stock, a total market value of $45.0 million in investment securities were pledged as collateral to the FHLB. The purchase of FHLB stock is a prerequisite to become a member of the FHLB system, and the Company is required to own a certain amount of FHLB stock based on total asset size and outstanding borrowings.

As part of the 2025 second quarter Merger, the Company assumed $160.0 million in FHLB advances, of which $125.0 million was paid off on April 2, 2025, and an additional $5.0 million matured prior to June 30, 2025. The remaining $30.0 million in FHLB advances outstanding at June 30, 2025, have maturities through June 2026, have a weighted average coupon rate of 1.70%, and were acquired at a discount of $441 thousand, with $248 thousand in discount remaining at June 30, 2025. See Note 16 - “Business Combinations” for additional information regarding the Merger.

The Company may also borrow from the FRB discount window up to the maximum amount, which is limited to 99% of the fair market value of the qualifying loans and securities that are pledged. At June 30, 2025, the outstanding principal balance of the qualifying loans pledged at the FRB discount window was $1.81 billion. There wereno investment securities pledged at the discount window at June 30, 2025.

The Company also maintains unsecured federal funds borrowing lines with other banks. There wereno borrowings outstanding from other banks at June 30, 2025 and December 31, 2024.

8. Convertible Notes and Subordinated Debentures

Convertible Notes

In 2018, the Company issued $217.5 million aggregate principal amount of 2.00% convertible senior notes maturing on May 15, 2038, in a private offering to qualified institutional buyers under Rule 144A of the Securities Act of 1933. The convertible notes are not capital instruments but can be converted into shares of the Company’s common stock at an initial rate of 45.0760 shares per $1,000 principal amount of the notes (equivalent to an initial conversion price of approximately $22.18 per share of common stock, which represented a premium of 22.50% to the closing stock price on the date of the pricing of the notes). Holders of the convertible notes have the option to convert all or a portion of the notes at any time on or after February 15, 2023. The convertible notes can be called by the Company, in part or in whole, on or after May 20, 2023, for 100% of the principal amount in cash. Holders of the convertible notes have the option to put the notes back to the Company on May 15, 2028, or May 15, 2033, for 100% of the principal amount in cash. The convertible notes can be settled in cash, stock, or a combination of stock and cash at the option of the Company.

On May 15, 2023, most holders of the Company’s convertible notes elected to exercise their optional put right and the Company paid off $197.1 million principal amount of notes in cash. During 2023, the Company also repurchased its notes in the aggregate principal amount of $19.9 million and recorded a gain on debt extinguishment of $405 thousand. The repurchased notes were immediately cancelled subsequent to the repurchase. These repurchases are separate from the optional put and were made through a third-party broker. No notes were repurchased or paid off in the six months ended June 30, 2025 or the year ended December 31, 2024.

The carrying value of the convertible notes at June 30, 2025 and December 31, 2024, was $444 thousand. The capitalized issuance costs were fully amortized at both June 30, 2025 and December 31, 2024.

Interest expense on the convertible notes for the three and six months ended June 30, 2025, totaled $2 thousand and $4 thousand, respectively. Interest expense on the convertible notes for the three and six months ended June 30, 2024, totaled $2 thousand and $4 thousand, respectively.

Subordinated Debentures

At June 30, 2025, the Company hadnine wholly owned subsidiary grantor trusts that had issued $126.0 million of pooled trust preferred securities. Trust preferred securities accrue and pay distributions periodically at specified annual rates as provided in the indentures. The trusts used the net proceeds from the offering to purchase a like amount of subordinated debentures. The subordinated debentures are the sole assets of the trusts. The Company’s obligations under the subordinated debentures and related documents, taken together, constitute a full and unconditional guarantee by the Company of the obligations of the trusts. The trust preferred securities are mandatorily redeemable upon the maturity of the subordinated debentures, or upon earlier redemption as provided in the indentures. The Company has the right to redeem the subordinated debentures in whole (but not in part) on a quarterly basis at a redemption price specified in the indentures plus any accrued but unpaid interest to the redemption date. The Company also has a right to defer consecutive payments of interest on the subordinated debentures for up tofive years.

The following table is a summary of trust preferred securities and subordinated debentures at June 30, 2025:

The carrying value of the subordinated debentures at June 30, 2025 and December 31, 2024, was $109.8 million and $109.1 million, respectively. At June 30, 2025 and December 31, 2024, acquired subordinated debentures had remaining discounts of $20.1 million and $20.8 million, respectively. The carrying balance of subordinated debentures is net of remaining discounts and includes common trust securities.

The Company’s investment in the common trust securities of the issuer trusts was $3.9 million at June 30, 2025 and December 31, 2024, and is included in other assets. Although the subordinated debentures issued by the trusts are not included as a component of stockholders’ equity in the Consolidated Statements of Financial Condition, the debt is treated as capital for regulatory purposes. The Company’s trust preferred security debt issuances (less common trust securities) are includable in Tier 1 capital up to a maximum of 25% of capital on an aggregate basis as they were grandfathered in under BASEL III. Any amount that exceeds 25% qualifies as Tier 2 capital.