HOPE BANCORP INC

Previous wording

Hope Bancorp, Inc. is the holding company of Bank of Hope, the only regional Korean American bank in the United States with $18.55 billion in total assets at June 30, 2025. With the addition of Territorial Savings, a division of Bank of Hope, effective April 2, 2025, the Company became the largest regional bank catering to multicultural customers across the continental United States and Hawaii. Headquartered in Los Angeles, the Bank provides a full suite of commercial, corporate and consumer loans, deposit and fee-based products and services, including commercial and commercial real estate lending, SBA lending, residential mortgage and other consumer lending; treasury management services, foreign currency exchange solutions, interest rate derivative products, and international trade financing, among others. The Bank operates 46 full-service branches in California, New York, New Jersey, Washington, Texas, Illinois, Georgia and Alabama under the Bank of Hope banner, and 29 branches in Hawaii under the Territorial Savings banner. The Bank also operates SBA loan production offices, commercial loan production offices, and residential mortgage loan production offices throughout the United States, and a representative office in Seoul, South Korea. Bank of Hope is a California-chartered bank, and its deposits are insured by the FDIC to the extent provided by law. Bank of Hope is an Equal Opportunity Lender.

Current wording

Hope Bancorp, Inc. is the holding company of Bank of Hope, the only regional Korean American bank in the United States with $18.51 billion in total assets at September 30, 2025. With the addition of Territorial Savings, a division of Bank of Hope, effective April 2, 2025, the Company became the largest regional bank catering to multicultural customers across the continental United States and Hawaii. Headquartered in Los Angeles, the Bank provides a full suite of commercial, corporate and consumer loans, deposit and fee-based products and services, including commercial and commercial real estate lending, SBA lending, residential mortgage and other consumer lending; treasury management services, foreign currency exchange solutions, interest rate derivative products, and international trade financing, among others. The Bank operates 45 full-service branches in California, New York, New Jersey, Washington, Texas, Illinois, Georgia and Alabama under the Bank of Hope banner, and 29 branches in Hawaii under the Territorial Savings banner. The Bank also operates SBA loan production offices, commercial loan production offices, and residential mortgage loan production offices throughout the United States, and a representative office in Seoul, South Korea. Bank of Hope is a California-chartered bank, and its deposits are insured by the FDIC to the extent provided by law. Bank of Hope is an Equal Opportunity Lender.

Previous wording

The following tables set forth a performance overview concerning the periods indicated and should be read in conjunction with the unaudited Consolidated Financial Statements and Notes set forth elsewhere in this Quarterly Report on Form 10-Q and the following Results of Operations and Financial Condition sections of this MD&A. During the second quarter of 2025, the acquisition of Territorial Bancorp Inc. was closed and we repositioned a portion of our investment securities AFS portfolio. The comparability of our operating results with past performance was impacted by acquisition accounting adjustments and merger-related expenses associated with the Territorial Merger and the loss on securities sold, which led to a recorded GAAP net loss in the second quarter of 2025. The Company has provided supplemental non-GAAP information to facilitate a better understanding of financial performance, identifying certain items as “notable”.

Current wording

The following tables set forth a performance overview concerning the periods indicated and should be read in conjunction with the unaudited Consolidated Financial Statements and Notes set forth elsewhere in this Quarterly Report on Form 10-Q and the following Results of Operations and Financial Condition sections of this MD&A. During the second quarter of 2025, the acquisition of Territorial Bancorp Inc. was closed and we repositioned a portion of our investment securities AFS portfolio. The comparability of our operating results for the nine months ended September 30, 2025, with past performance was impacted by acquisition accounting adjustments and merger-related expenses associated with the Territorial Merger and the loss on securities sold. The Company has provided supplemental non-GAAP information to facilitate a better understanding of financial performance, identifying certain items as “notable”.

Previous wording

During the three months ended June 30, 2025, our operating results included certain notable non-recurring items as a result of the completion of the Merger with Territorial, our legacy investment securities repositioning, the change in the California state tax apportionment rate, and other items. The following table summarizes the impact of non-core notable items recorded for the periods indicated and reconciles them to the most directly comparable GAAP financial measure.

Current wording

During the three and nine months ended September 30, 2025 and 2024, our operating results included certain notable items as a result of the Merger with Territorial, our legacy investment securities repositioning, the change in the California state tax apportionment rate, and other items. The following table summarizes the impact of non-core notable items recorded for the periods indicated and reconciles them to the most directly comparable GAAP financial measure.

Previous wording

Return on average tangible equity is calculated by dividing net income for the period (annualized) by average stockholders’ equity for the period after subtracting average goodwill and core deposit intangible assets for the period from average stockholders’ equity.

Current wording

Return on average tangible common equity is calculated by dividing net income for the period (annualized) by average stockholders’ equity for the period after subtracting average goodwill and core deposit intangible assets for the period from average stockholders’ equity.

Previous wording

The Company completed its acquisition of Honolulu-based Territorial, the holding company of Territorial Savings Bank, effective April 2, 2025. With the acquisition of Territorial Savings, a division of Bank of Hope, the Company became the largest regional bank catering to multicultural customers across the continental United States and Hawaii. In addition, the Company repositioned a portion of its legacy investment securities portfolio available for sale in June 2025. Accordingly, notable items specific to the second quarter of 2025 totaled $52.4 million after tax, comprising $30.5 million after tax in net loss on sales of securities related to the investment securities repositioning, $17.1 million after tax in merger-related items, and a $4.9 million one-time impact on income tax expense of a change in California’s state tax apportionment law that was signed on June 27, 2025.

Current wording

The Company completed its acquisition of Honolulu-based Territorial, the holding company of Territorial Savings Bank, effective April 2, 2025. With the acquisition of Territorial Savings, a division of Bank of Hope, the Company became the largest regional bank catering to multicultural customers across the continental United States and Hawaii. In addition, the Company repositioned a portion of its legacy investment securities portfolio available for sale in June 2025. Accordingly, notable items specific to the second quarter of 2025 totaled $52.4 million after tax, comprising $30.5 million after tax in net loss on sales of securities related to the investment securities repositioning, $17.1 million after tax in merger-related items, and a $4.9 million impact on income tax expense from the change in California’s state tax apportionment law.

Previous wording

Net loss for the second quarter of 2025 was $27.9 million, or $(0.22) per diluted common share, compared with net income of $25.3 million, or $0.21 per diluted common share, for the same period of 2024, which was a decrease of $53.2 million. Second quarter 2025 results included an aggregate $52.4 million of notable items, which impacted the comparability of the Company’s operating results with past performance. See the “General” section of this MD&A for a reconciliation of GAAP to non-GAAP financial measures.

Current wording

See the “General” section of this MD&A for a reconciliation of GAAP to non-GAAP financial measures.

Previous wording

Net interest income before provision for credit losses was $117.5 million for the second quarter of 2025, compared with $105.9 million for the same period of 2024, an increase of $11.7 million, or 11.0%. The year-over-year increase in net interest income was primarily driven by lower cost of deposits and an increase in the average balance of interest earning assets, partially offset by an increase in the average balance of deposits and lower yields on loans. The Federal Funds target rate was cut by an aggregate 100 basis points during the second half of 2024, impacting average yields and rates for the 2025 second quarter, compared with the same period of 2024.

Current wording

Net interest income before provision for credit losses was $126.6 million for the third quarter of 2025, compared with $104.8 million for the same period of 2024, an increase of $21.8 million, or 20.8%. The year-over-year increase in net interest income was primarily driven by a lower cost of deposits and an increase in the average balance of interest earning assets, partially offset by an increase in the average balance of interest bearing deposits and lower yields on loans. As of September 30, 2025, the Federal Funds target rate was cut by an aggregate 75 basis points since September 30, 2024, impacting average yields and rates for the 2025 third quarter, compared with the same period of 2024.

Previous wording

Net interest income before provision for credit losses was $218.4 million for the six months ended June 30, 2025, compared with $220.9 million for the same period of 2024, a decrease of $2.6 million, or 1.2%. The year-over-year decrease in year-to-date net interest income was driven by lower yields on loans and an increase in the average balance of deposits, partially offset by a lower cost of funds resulting from the Federal Funds target rate cut of an aggregate 100 basis points during the second half of 2024 that impacted average yields and rates for the first half of 2025, compared with the same period of 2024.

Current wording

Net interest income before provision for credit losses was $345.0 million for the nine months ended September 30, 2025, compared with $325.7 million for the same period of 2024, an increase of $19.3 million, or 5.9%. The year-over-year increase in year-to-date net interest income was primarily driven by a lower cost of funds and an increase in the average balance of loans, partially offset by lower yields on loans and an increase in the average balance of deposits. As of September 30, 2025, the Federal Funds target rate was cut by an aggregate 75 basis points since September 30, 2024, impacting average yields and rates for the nine months ended September 30, 2025, compared with the same period of 2024.

Previous wording

The following table summarizes the accretion and amortization adjustments resulting from the Merger with Territorial that were included in net interest income for the three and six months ended June 30, 2025 and 2024:

Current wording

The following table summarizes the accretion and amortization adjustments resulting from the Merger with Territorial that were included in net interest income for the three and nine months ended September 30, 2025 and 2024:

Previous wording

Net interest margin is impacted by the weighted average rates earned on interest earning assets and paid on interest bearing liabilities. The net interest margin for the second quarter of 2025 increased to 2.69%, from 2.62% for the same period of 2024. The net interest margin for the six months ended June 30, 2025, was 2.62%, an increase of 4 basis points from 2.58% for the same period of 2024. The increase in net interest margin was primarily due to lower weighted average costs of interest bearing deposits and increases in the average balances of loans, partially offset by higher average balances of interest bearing deposits.

Current wording

Net interest margin is impacted by the weighted average rates earned on interest earning assets and paid on interest bearing liabilities. The net interest margin for the third quarter of 2025 was 2.89%, up 34 basis points from 2.55% for the same period of 2024. The net interest margin for the nine months ended September 30, 2025, was 2.71%, an increase of 14 basis points from 2.57% for the same period of 2024. The increase in net interest margin for the third quarter 2025, compared with the same period of 2024, was primarily due to lower weighted average costs of interest bearing deposits and higher average yield on investment securities, partially offset by lower average yield on loans and a shift in funding mix. The year-over-year increase in net interest margin for the nine months ended September 30, 2025, was primarily driven by lower weighted average costs of interest bearing deposits, lower average balances of FHLB and FRB borrowings, and higher average loan balances, partially offset by lower weighted average yields on interest earning assets and higher average balances of interest bearing deposits.

Previous wording

The weighted average yield on loans decreased to 5.88% for the second quarter of 2025, down 32 basis points from 6.20% for the same period of 2024. The year-over-year decrease in loan yields was driven by spread compression on new loan originations and the downward repricing of variable rate loans, reflecting year-over-year decreases in benchmark interest rates. At June 30, 2025, variable interest rate loans made up 42% of the loan portfolio. The weighted average yield on loans decreased by 35 basis points to 5.88% for the six months ended June 30, 2025, down from 6.23% for the same period of 2024. The year-over-year decrease in average yields was driven by the downward repricing of variable rate loans, reflecting higher benchmark interest rates in 2024 versus 2025.

Current wording

The weighted average yield on loans decreased to 5.93% for the third quarter of 2025, down 23 basis points from 6.16% for the same period of 2024. The weighted average yield on loans decreased by 31 basis points to 5.89% for the nine months ended September 30, 2025, down from 6.20% for the same period of 2024. The year-over-year decrease in average loan yields was driven by the downward repricing of variable rate loans, reflecting higher benchmark interest rates in 2024 versus 2025. At September 30, 2025, variable interest rate loans made up 41% of the loan portfolio.

Previous wording

The weighted average yield on investment securities for the three and six months ended June 30, 2025, was 3.25% and 3.17%, respectively, compared with 3.11% and 3.12% for the same periods of 2024, respectively. The increase in average yields was primarily due to higher rates on new purchases of investment securities. At June 30, 2025, 29% of the investment portfolio consisted of securities with variable coupon rates. The change in yields was also impacted by fluctuations in the overall investment portfolio yield due to the change in pay-down speeds of investment securities.

Current wording

The weighted average yield on investment securities for the three and nine months ended September 30, 2025, was 3.77% and 3.38%, respectively, compared with 3.05% and 3.10% for the same periods of 2024, respectively. The increase in average yields was primarily due to higher rates on new purchases of investment securities, and the sale of lower-yielding investment securities in the second quarter of 2025 as part of a strategic portfolio repositioning. At September 30, 2025, 29% of the investment portfolio consisted of securities with variable coupon rates. The change in yields was also impacted by fluctuations in the overall investment portfolio yield due to the change in pay-down speeds of investment securities.

Previous wording

The weighted average yield on interest earning cash and deposits at other banks for the second quarter of 2025 was 4.36%, a decrease of 60 basis points from 4.96% for the same period of 2024. The weighted average yield on interest earning cash and deposits at other banks for the six months ended June 30, 2025, was 4.32%, a decrease of 101 basis points from 5.33% for the same period of 2024. The yield on interest earning cash and deposits at other banks is tied to the Federal Funds rate.

Current wording

The weighted average yield on interest earning cash and deposits at other banks for the third quarter of 2025 was 4.28%, a decrease of 95 basis points from 5.23% for the same period of 2024. The weighted average yield on interest earning cash and deposits at other banks for the nine months ended September 30, 2025, was 4.24%, a decrease of 108 basis points from 5.32% for the same period of 2024. The yield on interest earning cash and deposits at other banks is tied to the Federal Funds rate.

Previous wording

The weighted average cost of deposits for the second quarter of 2025 was 2.96%, a decrease of 43 basis points from 3.39% for the same period of 2024. The weighted average cost of deposits for the six months ended June 30, 2025, was 3.07%, a decrease of 30 basis points from 3.37% for the same period of 2024. The year-over-year decrease in the cost of deposits was driven by decreases in market interest rates and by the positive impact of the acquired Territorial deposits, which have a lower cost of funds.

Current wording

The weighted average cost of deposits for the third quarter of 2025 was 2.88%, a decrease of 56 basis points from 3.44% for the same period of 2024. The weighted average cost of deposits for the nine months ended September 30, 2025, was 3.00%, a decrease of 40 basis points from 3.40% for the same period of 2024. The year-over-year decrease in the cost of deposits was driven by decreases in market interest rates, the positive impact of the acquired Territorial deposits, which have a lower cost of funds, and the planned reduction of higher-costing brokered deposits.

Previous wording

The weighted average cost of FHLB and FRB borrowings for the second quarter of 2025 was 3.00%, an increase of 38 basis points from 2.62% for the same period of 2024. The year-over-year increase in the cost of FHLB and FRB borrowings was primarily due to a decrease in cash flow hedges of FHLB borrowings, some of which matured in second quarter of 2025, and the impact of borrowings acquired from Territorial. The weighted average cost of FHLB and FRB borrowings for the six months ended June 30, 2025, was 1.71%, a decrease of 237 basis points from 4.08% for the same period of 2024. The year-over-year decrease in the year-to-date cost of FHLB and FRB borrowings primarily reflected the payoff of $1.70 billion in FRB BTFP borrowings in the first half of 2024, which had a weighted average rate of 4.47%.

Current wording

The weighted average cost of FHLB and FRB borrowings for the third quarter of 2025 was 3.97%, an increase of 288 basis points from 1.09% for the same period of 2024. The year-over-year increase in the cost of FHLB and FRB borrowings was primarily due to a decrease in cash flow hedges on FHLB borrowings, some of which matured in second quarter of 2025, and the impact of borrowings acquired from Territorial. The weighted average cost of FHLB and FRB borrowings for the nine months ended September 30, 2025, was 2.03%, a decrease of 187 basis points from 3.90% for the same period of 2024. The year-over-year decrease in the year-to-date cost of FHLB and FRB borrowings primarily reflected the payoff of $1.70 billion in FRB BTFP borrowings in the first half of 2024, which had a weighted average rate of 4.47%.

Previous wording

The weighted average cost of subordinated debentures for the second quarter of 2025 was 9.05%, a decrease of 130 basis points from 10.35% for the same period of 2024. The weighted average cost of subordinated debentures for the six months ended June 30, 2025, was 9.09%, a decrease of 129 basis points from 10.38% for the same period of 2024. The subordinated debentures have variable interest rates that are tied to the three-month Chicago Mercantile Exchange term Secured Financing Overnight Rate (“SOFR”) rate.

Current wording

The weighted average cost of subordinated debentures for the third quarter of 2025 was 9.01%, a decrease of 127 basis points from 10.28% for the same period of 2024. The weighted average cost of subordinated debentures for the nine months ended September 30, 2025, was 9.07%, a decrease of 128 basis points from 10.35% for the same period of 2024. The subordinated debentures have variable interest rates that are tied to the three-month Chicago Mercantile Exchange term Secured Financing Overnight Rate (“SOFR”) rate.

Previous wording

The provision for credit losses includes both provision for credit loss on loans and provision for unfunded loan commitments. The provision for credit losses for the second quarter of 2025 was $15.0 million, an increase of $13.6 million from $1.4 million for the same period of the prior year. The provision for credit losses for the six months ended June 30, 2025, was $19.8 million, an increase of $15.8 million from $4.0 million for the same period of the prior year. The second quarter 2025 provision for credit losses included $4.5 million of merger-related provision expenses that the Company considered a notable item. With the acquisition of Territorial, the Company adopted Territorial’s white-label credit card program. See the “General” section of this MD&A for a reconciliation of GAAP to non-GAAP financial measures.

Current wording

The provision for credit losses includes both provision for credit loss on loans and provision for unfunded loan commitments. The provision for credit losses for the third quarter of 2025 was $8.7 million, an increase of $5.4 million from $3.3 million for the same period of the prior year. The provision for credit losses for the nine months ended September 30, 2025, was $28.5 million, an increase of $21.2 million from $7.3 million for the same period of the prior year. The provision for credit losses for the nine months ended September 30, 2025 included $4.5 million of merger-related provision expenses that the Company considered a notable item.

Previous wording

The increase in provision for credit losses for the three and six months ended June 30, 2025, compared to the same periods in 2024, was primarily due to increases in provision for credit losses on C&I loans and residential mortgage loans, offset partially by a decrease in provision for credit losses on CRE loans. The year over year increase in provision for credit losses on C&I loans was primarily due increased charge offs on C&I loans in 2025, compared with the same periods of 2024. The year-over-year increase in provision for credit losses on residential mortgage loans reflected the impact of the Territorial acquisition, which contributed $1.07 billion of loans. The decrease in provision for credit losses on CRE loans was primarily due to updates to historical loss and prepayment assumptions during the six months ended June 30, 2025.

Current wording

The increase in provision for credit losses for the three and nine months ended September 30, 2025, compared to the same periods in 2024, was primarily due to increases in provision for credit losses on C&I loans, residential mortgage loans, and other consumer loans offset partially by a decrease in provision for credit losses on CRE loans. The year over year increase in provision for credit losses on C&I loans was primarily due to increased charge offs on C&I loans in 2025, compared with the same periods of 2024. The year-over-year increases in provision for credit losses on residential mortgage loans reflected the addition of $1.07 billion of loans from the Territorial acquisition. The decrease in provision for credit losses on CRE loans was primarily due to updates to historical loss and prepayment assumptions during the nine months ended September 30, 2025.

Previous wording

The provision for unfunded loan commitments was $1.0 million and $600 thousand for the three and six months ended June 30, 2025, respectively, compared with a recapture of provision for unfunded loan commitments of $300 thousand and $1.3 million for the same periods of 2024, respectively. The year-over-year increase in the provision for unfunded loan commitments was due primarily to the change in balances of unfunded loan commitments.

Current wording

The provision for unfunded loan commitments was $610 thousand and $1.2 million for the three and nine months ended September 30, 2025, respectively, compared with a provision for unfunded loan commitments of $280 thousand and a recapture of provision for unfunded loan commitments of $1.0 million for the same periods of 2024, respectively. The year-over-year increase in the provision for unfunded loan commitments was primarily due to the change in balances of unfunded loan commitments.

Previous wording

Noninterest income is primarily comprised of service fees on deposit accounts, international service fees (fees received on trade finance letters of credit), wire transfer and foreign currency fees, swap fee income, net gains on sales of SBA loans, net gains or losses on sales of investment securities AFS, and other income and fees. Noninterest income for the second quarter of 2025 was $(23.0) million, compared with $11.1 million for the same period of 2024, a decrease of $34.0 million. Noninterest income for the six months ended June 30, 2025, was $(7.3) million, compared with $19.4 million for the same period of the prior year, a decrease of $26.6 million. Noninterest income in the second quarter of 2025 included $38.9 million of losses on investment securities AFS related to the securities portfolio repositioning, which we consider a notable item. See the “General” section of this MD&A for a reconciliation of GAAP to non-GAAP financial measures.

Current wording

Noninterest income is primarily comprised of service fees on deposit accounts, international service fees (fees received on trade finance letters of credit), wire transfer and foreign currency fees, swap fee income, net gains on sales of SBA loans, net gains or losses on sales of investment securities AFS, and other income and fees. Noninterest income for the third quarter of 2025 was $15.4 million, compared with $11.8 million for the same period of 2024, an increase of $3.5 million. Noninterest income for the nine months ended September 30, 2025, was $8.1 million, compared with $31.2 million for the same period of the prior year, a decrease of $23.1 million. Noninterest income in the nine months ended September 30, 2025, included $38.9 million of losses on investment securities AFS related to the securities portfolio repositioning, which we consider a notable item. See the “General” section of this MD&A for a reconciliation of GAAP to non-GAAP financial measures.

Previous wording

The year-over-year decreases in noninterest income for the three and six months ended June 30, 2025, were primarily driven by net losses on sales of investment securities AFS, due to a securities portfolio repositioning, partially offset by increases in net gains on sales of SBA loans, swap fees, and other income and fees.

Current wording

The year-over-year increase in noninterest income for the three months ended September 30, 2025, was primarily driven by increases in swap fees, service fees on deposit accounts, wire transfer and foreign currency fees, and other income and fees. The year-over-year decrease in noninterest income for the nine months ended September 30, 2025, was primarily driven by net losses on sales of investment securities AFS, due to a securities portfolio repositioning in June 2025, partially offset by increases in net gains on sales of SBA loans, swap fees, service fees on deposit accounts, and other income and fees.

Previous wording

Swap fee income represents fees earned from back-to-back swap transactions for our loan customers. The number of swap transactions is directly proportional to the increase in loan originations, which increased in 2025, and resulted in an increase in swap fee income for the three and six months ended June 30, 2025, compared with the same periods in 2024.

Current wording

Swap fee income represents fees earned from back-to-back swap transactions for our loan customers. The number of swap transactions is proportional to the increase in loan originations, which increased in 2025, and resulted in an increase in swap fee income for the three and nine months ended September 30, 2025, compared with the same periods in 2024.

Previous wording

During the three and six months ended June 30, 2025, we sold $67.4 million and $117.3 million in SBA guaranteed loans, respectively, and recorded $4.0 million and $7.1 million, respectively, in net gains on sale of SBA loans. This compares with net gains of $2.0 million for the three and six months ended June 30, 2024, on $29.8 million in SBA guaranteed loans sold. The Bank resumed the sales of SBA guaranteed loans in the second quarter of 2024 due to improved premiums in the secondary markets, after retaining loan production on balance sheet starting in the second half of 2023.

Current wording

During the three and nine months ended September 30, 2025, we sold $48.1 million and $165.4 million in SBA guaranteed loans, respectively, and recorded $2.8 million and $9.9 million, respectively, in net gains on sale of SBA loans. This compares with net gains of $2.7 million and $4.7 million for the three and nine months ended September 30, 2024, respectively, on $41.4 million and $71.2 million in SBA guaranteed loans sold, respectively. The Bank resumed the sales of SBA guaranteed loans in the second quarter of 2024 due to improved premiums in the secondary markets, after retaining loan production on balance sheet starting in the second half of 2023. Due to the federal government shutdown that began on October 1, 2025, the Small Business Administration has suspended the acceptance of new SBA loan applications and the secondary market for SBA 7(a) loan sales has closed. If the government shutdown continues to persist, it may impact our ability to sell SBA loans and our net gains on the sale of SBA loans. Once the government shutdown is resolved, the pipeline of loans in progress with our SBA department will be processed. Outside of SBA, we do not expect the government shutdown to have a material impact to our other borrowers.

Previous wording

As part of a strategic repositioning, in June 2025, the Company sold a portion of its 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.

Current wording

In June 2025, we repositioned a part of our investment securities AFS portfolio. We sold securities 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.

Previous wording

Other income and fees for the three months ended June 30, 2025, included a $662 thousand increase in earnings from BOLI and an increase of $224 thousand in other recovery income compared with same period of 2024. Other income and fees for the six months ended June 30, 2025, included increases of $1.6 million in net gains on sale of mortgage loans, $675 thousand in earnings from BOLI, and $807 thousand in unrealized gain from equity investments, compared with the same period in 2024.

Current wording

Other income and fees for the three months ended September 30, 2025, included an increase of $788 thousand in earnings from BOLI, compared with the same period of 2024. Other income and fees for the nine months ended September 30, 2025, included increases of $1.7 million in net gains on sale of other loans, $1.5 million in earnings from BOLI, and $1.0 million in fair value adjustments of equity investments, compared with the same period of 2024.

Previous wording

Noninterest expense for the second quarter of 2025 was $109.5 million, an increase of $28.5 million, or 35.2%, from $81.0 million for the second quarter of 2024. Noninterest expense for the six months ended June 30, 2025, was $193.3 million, an increase of $27.5 million, or 16.6%, from $165.8 million for the same period of the prior year. Noninterest expense in the second quarter of 2025 included $17.3 million of merger and restructuring-related costs, which the Company considers a notable item. See the “General” section of this MD&A for a reconciliation of GAAP to non-GAAP financial measures.

Current wording

Noninterest expense for the third quarter of 2025 was $96.9 million, an increase of $15.6 million, or 19.2%, from $81.3 million for the third quarter of 2024. Noninterest expense for the nine months ended September 30, 2025, was $290.2 million, an increase of$43.1 million, or 17.4%, from $247.1 million for the same period of the prior year. Noninterest expense included merger and restructuring-related costs, which the Company considers a notable item. See the “General” section of this MD&A for a reconciliation of GAAP to non-GAAP financial measures. Excluding notable items, noninterest expense for the third quarter of 2025 was $95.9 million compared with $79.8 million in the year-ago period; noninterest expense for the nine months ended September 30, 2025, was $269.4 million compared with $241.4 million in the year-ago period. See the “General” section of this MD&A for a reconciliation of GAAP to non-GAAP financial measures.

Previous wording

The year-over-year increase in noninterest expense for the three and six months ended June 30, 2025 compared with the same periods in 2024, was primarily driven by an increase in merger and restructuring-related costs, salaries and employee benefits, other noninterest expense, furniture and equipment expense, and occupancy expense, partially offset by a decrease in earned interest credits expense. We closed the acquisition of Territorial on April 2, 2025, and the second quarter of 2025 reflected a full quarter of operating expenses related to the Territorial franchise.

Current wording

The year-over-year increase in noninterest expense for the three and nine months ended September 30, 2025, compared with the same periods of 2024, was primarily driven by increases in salaries and employee benefits, furniture and equipment expense, occupancy expense, and other noninterest expense, partially offset by a decrease in earned interest credits expense. The year-over-year increase in noninterest expense for the nine months ended September 30, 2025, also included higher merger and restructuring-related costs, compared with the same period of 2024. We closed the acquisition of Territorial on April 2, 2025, and the year-to-date third quarter of 2025 included two quarters of operating expenses related to the Territorial franchise.

Previous wording

Salaries and employee benefits expense increased $8.7 million, or 19.8%, for the second quarter of 2025, compared with the same period of 2024, and increased $9.6 million, or 10.5%, for the six months ended June 30, 2025, compared with the same period in 2024. The year-over-year increase in salaries and employee benefits was primarily due to an increase in headcount as a result of the Territorial acquisition. The number of full-time equivalent employees was 1,416 and 1,238 at June 30, 2025 and 2024, respectively.

Current wording

Salaries and employee benefits expense increased $10.8 million, or 24.3%, for the third quarter of 2025, compared with the same period of 2024, and increased $20.4 million, or 15.0%, for the nine months ended September 30, 2025, compared with the same period of 2024. The year-over-year increase in salaries and employee benefits was primarily due to an increase in headcount following the Territorial acquisition. The number of full-time equivalent employees was 1,452 and 1,236 at September 30, 2025 and 2024, respectively.

Previous wording

Occupancy expense increased by $2.0 million, or 28.6%, for the second quarter of 2025, compared with the same period of 2024, and increased $2.4 million, or 17.2%, for the six months ended June 30, 2025, compared with the same period in 2024. The increase in occupancy expense was primarily due to the increased number of Bank locations resulting from the Territorial acquisition. The Company acquired 29 branches in Hawaii from its Merger with Territorial.

Current wording

Occupancy expense increased by $2.2 million, or 31.9%, for the third quarter of 2025, compared with the same period of 2024, and increased $4.6 million, or 22.2%, for the nine months ended September 30, 2025, compared with the same period of 2024. The increase in occupancy expense was primarily due to the increased number of Bank locations resulting from the Territorial acquisition. The Company acquired 29 branches in Hawaii from its Merger with Territorial.

Previous wording

Furniture and equipment expense increased $2.3 million, or 42.8%, for the second quarter of 2025, compared with the same period of 2024, and increased $2.7 million, or 25.1%, for the six months ended June 30, 2025, compared with the same period in 2024. The increase in furniture and equipment expense was primarily due to increased depreciation expense on furniture, software and equipment as a result of the Territorial acquisition.

Current wording

Furniture and equipment expense increased $2.6 million, or 47.8%, for the third quarter of 2025, compared with the same period of 2024, and increased $5.3 million, or 32.6%, for the nine months ended September 30, 2025, compared with the same period of 2024. The increase in furniture and equipment expense was primarily due to increased depreciation expense on furniture, software and equipment as a result of the Territorial acquisition.

Previous wording

Earned interest credits are provided to certain commercial depositors to help offset deposit service charges incurred. The earned interest credits are tied to short-term interest rates, and accordingly, earned interest credit expense decreased with the decreases in the Federal Funds rate since September 2024. Earned interest credit expense decreased $2.8 million, or 46.1%, for the second quarter of 2025, compared with the same period of 2024, and decreased $5.6 million, or 46.6%, for the six months ended June 30, 2025, compared with the year-ago period.

Current wording

Earned interest credits are provided to certain commercial depositors to help offset deposit service charges incurred. The earned interest credits are tied to short-term interest rates, and accordingly, earned interest credit expense decreased with the decreases in the Federal Funds rate since September 2024. In addition, the average balances of these deposits declined year over year. Earned interest credit expense decreased $3.3 million, or 48.6%, for the third quarter of 2025, compared with the same period of 2024, and decreased $8.9 million, or 47.3%, for the nine months ended September 30, 2025, compared with the year-ago period.

Previous wording

Merger and restructuring-related costs increased $15.1 million, or 698.2%, for the second quarter of 2025, compared with the same period of 2024, and increased $16.2 million, or 448.3%, for the six months ended June 30, 2025, compared with the same period in 2024. Merger and restructuring-related costs mainly related to change-in-control and employee severance and retention expenses related to the acquisition of Territorial Bancorp Inc., which was completed on April 2, 2025. See Note 16 - “Business Combinations” of the Notes to Consolidated Financial Statements for additional information regarding the Merger.

Current wording

Merger and restructuring-related costs decreased $475 thousand, or 33.1%, for the third quarter of 2025, compared with the same period of 2024, and increased $15.7 million, or 311.5%, for the nine months ended September 30, 2025, compared with the same period of 2024. Merger and restructuring-related costs mainly related to change-in-control and employee severance and retention expenses related to the Territorial acquisition, which was completed on April 2, 2025. See Note 16 - “Business Combinations” of the Notes to Consolidated Financial Statements for additional information regarding the Merger.

Previous wording

Other noninterest expense increased by $2.9 million, or 47.7%, for the second quarter of 2025, compared with the same period of 2024, and increased by $4.2 million, or 34.2%, for the six months ended June 30, 2025, compared with the same period of 2024. The year-over-year increase was primarily driven by an increase in credit workout-related expense and increased core deposit intangible amortization expense related to acquired deposits from Territorial.

Current wording

Other noninterest expense increased by $711 thousand, or 10.1%, for the third quarter of 2025, compared with the same period of 2024. The year-over-year increase was primarily driven by increases in core deposit intangible amortization expense related to acquired deposits from Territorial. The increase in other noninterest expense of $4.9 million, or 25.5%, for the nine months ended September 30, 2025, compared with the same period of 2024, was primarily driven by credit workout-related expenses, in addition to the factors mentioned above for the third quarter of 2025.

Previous wording

For the three months ended June 30, 2025, the Company recorded an income tax benefit of $2.0 million on pretax loss of $29.9 million, representing an effective tax rate of 6.74%, compared with an income tax provision of $9.3 million on pretax income of $34.5 million, representing an effective tax rate of 26.85% for the three months ended June 30, 2025.

Current wording

For the three months ended September 30, 2025, the Company recorded an income tax provision of $5.6 million on pretax income of $36.5 million, representing an effective tax rate of 15.40%, compared with an income tax provision of $7.9 million on pretax income of $32.1 million, representing an effective tax rate of 24.74%, for the three months ended September 30, 2025.

Previous wording

For the six months ended June 30, 2025, the Company recorded an income tax provision of $4.7 million on pretax loss of $2.1 million, representing an effective tax rate of (230.65)%, compared with an income tax provision of $19.3 million on pretax income of $70.4 million, representing an effective tax rate of 27.41% for the six months ended June 30, 2025.

Current wording

For the nine months ended September 30, 2025, the Company recorded an income tax provision of $10.3 million on pretax income of $34.4 million, representing an effective tax rate of 30.07%, compared with an income tax provision of $27.2 million on pretax income of $102.5 million, representing an effective tax rate of 26.57% for the nine months ended September 30, 2025.

Previous wording

The year-over-year changes in the income tax provision or benefit, and effective tax rates for the three and six months of 2025 compared with the three and six months of 2024 reflected the impact of merger-related expenses and securities portfolio sales recognized in the second quarter of 2025, both of which reduced pre-tax income. In addition, income tax expense and the effective tax rate were impacted by a change in California’s state tax apportionment law that was signed on June 27, 2025, and which became effective for tax years beginning on or after January 1, 2025.

Current wording

The year-over-year changes in the income tax provision or benefit, as well as the effective tax rates, for the three and nine months ended September 30, 2025, compared with the three and nine months ended September 30, 2024, reflected the impact of renewable energy tax credit investments made in the third quarter of 2025; as well as merger-related expenses and net losses on sale of investment securities recognized in the second quarter of 2025, both of which reduced pre-tax income. In addition, income tax expense and the effective tax rate were impacted by a change in California’s state tax apportionment law that was signed on June 27, 2025, and which became effective for tax years beginning on or after January 1, 2025.

Previous wording

We invest in affordable housing partnerships and receive tax credits that reduce our overall effective tax rate. Amortization of investments in affordable housing partnerships is recorded in noninterest expense based on benefit schedules of individual investment projects under the equity method of accounting. The benefit schedules show tax deductions investors can take each year. We amortize the initial cost of the investments in affordable housing partnerships. This amortization expense is more than offset by both tax credits received, which reduce our tax provision expense dollar for dollar, and the tax benefits related to any tax losses generated through the affordable housing project’s expenditures. For the three and six months ended June 30, 2025, total tax credits related to our investment in affordable housing partnerships were approximately $2.3 million and $4.7 million, respectively. This compares with approximately $2.1 million and $4.3 million in tax credits related to our investment in affordable housing partnerships for the same periods in 2024, respectively.

Current wording

We invest in affordable housing partnerships and receive tax credits that reduce our overall effective tax rate. Amortization of investments in affordable housing partnerships is recorded in noninterest expense based on benefit schedules of individual investment projects under the equity method of accounting. The benefit schedules show tax deductions investors can take each year. We amortize the initial cost of the investments in affordable housing partnerships. This amortization expense is more than offset by tax credits received, which reduce our tax provision expense dollar for dollar, and the tax benefits related to any tax losses generated through the affordable housing project’s expenditures. For the three and nine months ended September 30, 2025, total tax credits and other tax benefits related to our investment in affordable housing partnerships were approximately $3.4 million and $9.1 million, respectively. This compares with approximately $2.8 million and $8.3 million in tax credits and other tax benefits related to our investment in affordable housing partnerships for the same periods in 2024, respectively.

Previous wording

In addition to affordable housing partnerships, during the fourth quarter of 2024, we also invested in projects that qualify for renewable energy tax credits. Amortization of investments in renewable energy projects is recorded as a part of the tax expense under the proportional amortization method of accounting and offsets some of the income tax benefits of the renewable energy tax credits. For the three and six months ended June 30, 2025, the amortization on the investment was $319 thousand and $638 thousand, respectively, and the total generated renewable energy tax credits and benefits was $350 thousand and $700 thousand, respectively. There was no amortization on investments in renewable energy projects or tax credits for the same periods of 2024.

Current wording

In addition to affordable housing partnerships, beginning in the fourth quarter of 2024, we began to invest in projects that qualify for renewable energy tax credits. Amortization of investments in renewable energy projects is recorded as a part of income tax expense under the proportional amortization method of accounting. For the three and nine months ended September 30, 2025, the total generated renewable energy tax credits and benefits were $21.9 million and $22.6 million, respectively. These were partially offset by the amortization on the investments, which was $20.1 million and $20.8 million for the three and nine months ended September 30, 2025, respectively. There were no tax credits or amortization on investments in renewable energy projects for the same periods of 2024.

Previous wording

On June 27, 2025, California Senate Bill 132 was signed into law, requiring that banks and financial companies transition from an equally weighted three-factor apportionment formula to a single-sales-factor apportionment formula, effective for tax years beginning in 2025. As a result of the change in the California tax apportionment rate during the quarter ended June 30, 2025, we recorded an incremental tax expense of $4.9 million related to the remeasurement of the deferred tax asset. This item is included in the reconciliation of GAAP to non-GAAP financial measures in the “General” section of this MD&A.

Current wording

On June 27, 2025, California Senate Bill 132 was signed into law, requiring that banks and financial companies transition from an equally weighted three-factor apportionment formula to a single-sales-factor apportionment formula, effective for tax years beginning in 2025. As a result of the change in the California tax apportionment rate effective beginning of 2025, we recorded an incremental tax expense of $4.9 million in the nine months ended September 30, 2025, related to the remeasurement of the deferred tax asset. This item is included in the reconciliation of GAAP to non-GAAP financial measures in the “General” section of this MD&A.

Previous wording

At June 30, 2025, total assets were $18.55 billion, an increase of $1.49 billion, or 8.8%, from $17.05 billion at December 31, 2024. The increase in total assets was primarily due to increases in loans receivable, cash and cash equivalents, investment securities, deferred taxes, BOLI, and other intangible assets during the six months ended June 30, 2025. These increases were mainly attributable to the acquisition of Territorial, which was effective April 2, 2025, with total acquired identifiable assets amounting to $1.93 billion.

Current wording

At September 30, 2025, total assets were $18.51 billion, an increase of $1.45 billion, or 8.5%, from $17.05 billion at December 31, 2024. The increase in total assets was primarily due to increases in loans receivable, investment securities, BOLI, equity investments, deferred taxes, and other intangible assets during the nine months ended September 30, 2025. These increases were mainly attributable to the acquisition of Territorial, which was completed on April 2, 2025, with total acquired identifiable assets amounting to $1.93 billion.