HOPE BANCORP INC
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 6, 2026
HOPE$13.18+0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-06.
0001128361-26-000028
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001128361-26-000037
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 121 previous paragraphs and 128 current paragraphs.
65 unchanged; 51 reworded; 8 added; 5 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 20 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
Net income for the six months ended June 30, 2026, was $62.6 million, or $0.49 per diluted common share, compared with net loss of $3.7 million, or $(0.03) per diluted share, for the same period of 2025, which was an increase of $66.2 million. Net income excluding notable items, a non-GAAP measure, for the six months ended June 30, 2026, was $64.2 million, or $0.50 per diluted common share, compared with net income of $47.5 million, or $0.38 per diluted share, for the same period of 2025. The comparison between the six-month periods ended June 30, 2026, and 2025, was impacted by the acquisition of Territorial in April 2025, which included only three months of activity in 2025.
Current report
Comparison of Six Months Ended June 30, 2026, with the Six Months Ended June 30, 2025
Current report
Customer related fees including service fees on deposit accounts; international service, wire transfer and foreign currency fees; and other customer-driven income and fees increased for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025. The increase in customer related fees were driven by the increases in deposit accounts and transactions and due to an increase in commercial loans. The increase in commercial borrowers resulted in an increase in business analysis fees and syndication related fees.
Current report
Noninterest income in the three and six months ended June 30, 2025, included $38.9 million of net 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 report
The increase in occupancy, furniture and equipment, software and subscriptions, and data and item processing for the three and six months ended June 30, 2026 compared to prior periods largely reflect the addition of expenses that resulted from the acquisition of Territorial which was completed on April 2, 2025.
Current report
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 75 basis point drop in the Federal Funds target rate since the first quarter of 2025. Earned interest credit expense decreased $809 thousand, or 24.4%, for the second quarter of 2026, compared with the same period of 2025, and decreased $1.5 million, or 23.7%, for the six months ended June 30, 2026, compared with the year-ago period.
Current report
Income tax provision expense was $9.6 million and $17.9 million for the three and six months ended June 30, 2026, respectively, compared with an income tax benefit of $1.3 million and income tax provision of $5.4 million for the same periods of 2025, respectively. The effective income tax rate for the three and six months ended June 30, 2026, was 22.44% and 22.28%, respectively, compared with 5.05% and 305.51% for the same periods of 2025, respectively.
Removed paragraphs (5)
Previous report
The increase in provision for credit losses for the three months ended March 31, 2026, compared with the same period in 2025, was primarily due to increases in provision for credit losses on CRE loans offset partially by decreases in provision for credit losses on C&I loans, residential mortgage loans, and other consumer loans.
Previous report
Service fees on deposit accounts increased for the three months ended March 31, 2026, compared with the same period of 2025, mainly due to increased business analysis fee income.
Previous report
Other customer-driven income and fees for the three months ended March 31, 2026, included an increase of $885 thousand in customer-level swap fees driven by a higher volume of customer swap transactions, compared with the same period of 2025. Customer-level swap fee income represents fees earned from back-to-back swap transactions for our loan customers.
Previous report
Occupancy, furniture and equipment expense increased $1.7 million, or 19.6%, for the first quarter of 2026, compared with the same period of 2025. The increase was primarily due to the increased number of Bank locations resulting from the Territorial acquisition. As of March 31, 2026, we operated 28 branches in Hawaii that were acquired in its 2025 Merger with Territorial.
Previous report
For the three months ended March 31, 2026, we recorded an income tax provision of $8.4 million on pretax income of $37.9 million, representing an effective tax rate of 22.10%, compared with an income tax provision of $6.7 million on pretax income of $27.8 million, representing an effective tax rate of 24.24%, for the three months ended March 31, 2025.
Reworded paragraphs (51)
Previous wording
Hope Bancorp, Inc. is the holding company of Bank of Hope, the only regional Korean American bank in the United States with $18.66 billion in total assets at March 31, 2026. 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 28 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 $18.99 billion in total assets at June 30, 2026. With the addition 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. 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 28 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 Bank’s principal business involves earning interest on loans and investment securities, primarily funded by deposits and borrowings. Operating income and net income are derived primarily from the difference between interest income received from interest earning assets and interest expense paid on interest bearing liabilities and, to a lesser extent, from fees received in connection with servicing loan and deposit accounts, providing fee-based products and services, and income from the sale of loans. Major expenses are the interest paid on deposits and borrowings, provisions for credit losses and general operating expenses, which primarily consist of salaries and employee benefits, occupancy costs, and other operating expenses. Interest rates are highly sensitive to many factors that are beyond our control, such as changes in the national economy and in the related monetary policies of the FRB, inflation, unemployment, consumer spending, tariffs, political changes, and other events. We cannot predict the impact that these factors and future changes in domestic and foreign economic and political conditions might have on our business, financial condition, and results of operations.
Current wording
The Bank’s principal business involves earning interest on loans and investment securities, primarily funded by deposits and borrowings. Operating income and net income (loss) are derived primarily from the difference between interest income received from interest earning assets and interest expense paid on interest bearing liabilities and, to a lesser extent, from fees received in connection with servicing loan and deposit accounts, providing fee-based products and services, and income from the sale of loans. Major expenses are the interest paid on deposits and borrowings, provisions for credit losses and general operating expenses, which primarily consist of salaries and employee benefits, occupancy costs, and other operating expenses. Interest rates are highly sensitive to many factors that are beyond our control, such as changes in the national economy and in the related monetary policies of the FRB, inflation, unemployment, consumer spending, tariffs, political changes, and other events. We cannot predict the impact that these factors and future changes in domestic and foreign economic and political conditions might have on our business, financial condition, and results of operations.
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. The comparability of our operating results for the three months ended March 31, 2026, with past performance was impacted by acquisition accounting adjustments and merger-related expenses associated with the 2025 Territorial Merger. We have 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, we completed the acquisition of Territorial Bancorp and repositioned our investment securities AFS portfolio. In addition, in the first quarter of 2026, we announced an upcoming acquisition of certain assets and liabilities of the Commercial Banking Unit of SMBC, the closing of which is subject to regulatory approvals and the satisfaction of other customary closing conditions. The comparability of our operating results for the three and six months ended June 30, 2025, with performance for the three and six months ended June 30, 2026, was impacted by acquisition accounting adjustments associated with the 2025 Territorial Merger, the loss on securities sold, merger-related expenses for both the Merger and SMBC acquisition, and the change in the California state tax apportionment rate. We have provided supplemental non-GAAP information to facilitate a better understanding of financial performance, identifying certain items as “notable.”
Previous wording
(1)Net income excluding notable items, earnings per common share - diluted excluding notable items, TCE per share, ROTCE, ROA excluding notable items, ROE excluding notable items, ROTCE excluding notable items, efficiency ratio excluding notable items, and TCE ratio are non-GAAP financial measures that we believe provide investors with information useful in understanding our operating results and financial condition. A quantitative reconciliation of the most directly comparable GAAP to non-GAAP financial measures is provided on the following pages.
Current wording
(1)Net income (loss) excluding notable items, earnings per common share - diluted excluding notable items, TCE per share, ROTCE, ROA excluding notable items, ROE excluding notable items, ROTCE excluding notable items, efficiency ratio excluding notable items, and TCE ratio are non-GAAP financial measures that we believe provide investors with information useful in understanding our operating results and financial condition. A quantitative reconciliation of the most directly comparable GAAP to non-GAAP financial measures is provided on the following pages.
Previous wording
During the three months ended March 31, 2026 and 2025, our operating results included certain notable items as a result of the 2025 Merger with Territorial 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 six months ended June 30, 2026 and 2025, our operating results included certain notable items as a result of the 2025 Merger with Territorial, our legacy investment securities repositioning, the change in the California state tax apportionment rate, and other items. We have presented figures that adjust for these notable items because they are irregular one-time events, and we believe that doing so will help investors better understand our operating performance. 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 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.
Current wording
Return on average tangible common equity is calculated by dividing net income (loss) 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
Net income for the first quarter of 2026 was $29.5 million, or $0.23 per diluted common share, an increase of $8.4 million over net income of $21.1 million, or $0.17 per diluted common share, for the same period of 2025. The year-over-year increase in net income was primarily due to increases in net interest income and noninterest income, partially offset by increases in noninterest expense and the provision for credit losses.
Current wording
Net income for the second quarter of 2026 was $33.0 million, or $0.26 per diluted common share, an increase of $57.8 million over net loss of $24.8 million, or $(0.19) per diluted common share, for the same period of 2025. The year-over-year increase in net income was primarily due to increases in noninterest income and net interest income and a decrease in noninterest expense. Net income excluding notable items, a non-GAAP measure, for the three months ended June 30, 2026, was $34.5 million, or $0.27 per diluted common share, compared with net income of $24.6 million, or $0.19 per diluted share, for the same period of 2025.
Previous wording
See the “General” section of this MD&A for a reconciliation of GAAP to non-GAAP financial measures.
Current wording
Notable items for the six months ended June 30, 2026, included merger-related expenses and other items. Notable items specific to the second quarter of 2025 totaled $49.3 million after tax, comprising $30.5 million after tax in net loss on sales of securities related to the investment securities repositioning, $14.0 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. See the “General” section of this MD&A for a reconciliation of GAAP to non-GAAP financial measures.
Previous wording
Net interest income was $124.1 million for the first quarter of 2026, compared with $100.8 million for the same period of 2025, an increase of $23.2 million, or 23.1%. 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. The year-over-year growth in average earning assets primarily reflected the acquisition of Territorial, which closed in the second quarter of 2025. As of March 31, 2026, the Federal Funds target rate was cut by an aggregate 75 basis points since March 31, 2025, favorably impacting funding costs for the first quarter of 2026 compared with the prior-year period.
Current wording
Net interest income was $253.0 million for the six months ended June 30, 2026, compared with $218.3 million for the same period of 2025, an increase of $34.8 million, or 15.9%. 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. The year-over-year growth in average earning assets primarily reflected the acquisition of Territorial, which closed in the second quarter of 2025. As of June 30, 2026, the Federal Funds target rate was cut by an aggregate 75 basis points since June 30, 2025, favorably impacting funding costs for the six months ended June 30, 2026, compared with the prior-year period.
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 first quarter of 2026 was 2.90%, up 36 basis points from 2.54% for the same period of 2025. The net interest margin expansion year over year was primarily driven by funding cost improvements, with the cost of interest bearing deposits decreasing 77 basis points to 3.37% for the first quarter of 2026, down from 4.14% for the first quarter of 2025, exceeding the decline in the Federal Funds target rate over the same period.
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 second quarter of 2026 was 2.96%, up 27 basis points from 2.69% for the same period of 2025. The net interest margin for the six months ended June 30, 2026, was 2.93%, an increase of 31 basis points from 2.62% for the same period of 2025. The net interest margin expansion year over year was primarily driven by funding cost improvements, with the cost of interest bearing deposits decreasing 46 basis points and 60 basis points for the three and six months ended June 30, 2026, compared to the same periods in 2025, respectively.
Previous wording
The weighted average yield on loans decreased to 5.69% for the first quarter of 2026, down 19 basis points from 5.88% for the same period of 2025. 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 2025 versus 2026. At March 31, 2026, variable interest rate loans made up 43% of the loan portfolio. The total accretion of net discount on acquired loans was $4.6 million and $229 thousand for the three months ended March 31, 2026 and 2025, respectively.
Current wording
The weighted average yield on loans decreased to 5.73% for the second quarter of 2026, down 15 basis points from 5.88% for the same period of 2025. The weighted average yield on loans decreased by 17 basis points to 5.71% for the six months ended June 30, 2026, down from 5.88% for the same period of 2025. 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 2025 versus 2026. At June 30, 2026, variable interest rate loans made up 46% of the loan portfolio. The total accretion of net discount on acquired loans was $4.5 million and $9.1 million for the three and six months ended June 30, 2026, respectively, compared with $4.1 million and $4.3 million for the same periods of 2025, respectively.
Previous wording
The weighted average yield on investment securities for the three months ended March 31, 2026, was 3.63%, an increase of 54 basis points from 3.09% for the same period of 2025. 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 partial repositioning. At March 31, 2026, 24% 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 six months ended June 30, 2026, was 3.68% and 3.65%, respectively, compared with 3.25% and 3.17% for the same periods of 2025, 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 securities portfolio repositioning. At June 30, 2026, 22% 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 cost of deposits for the first quarter of 2026 was 2.64%, a decrease of 54 basis points from 3.18% for the same period of 2025. The weighted average cost of interest bearing deposits for the first quarter of 2026 was 3.37%, a decrease of 77 basis points from 4.14% for the same period of 2025. 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 reductions of higher-costing time deposits.
Current wording
The weighted average cost of deposits for the three and six months ended June 30, 2026, was 2.60% and 2.62%, respectively, a decrease of 36 basis points and 45 basis points, respectively, from 2.96% and 3.07% for the same periods of 2025, respectively. The weighted average cost of interest bearing deposits for the three and six months ended June 30, 2026, was 3.31% and 3.34%, respectively, a decrease of 46 basis points and 60 basis points, respectively, from 3.77% and 3.94% for the same periods of 2025, respectively. The year-over-year decrease in the cost of deposits was driven by decreases in market interest rates, the planned runoff of higher-cost time deposits, and the positive impact of the acquired Territorial deposits, which have a lower cost of funds.
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 first quarter of 2026 was $8.7 million, an increase from $4.8 million for the same period of the prior year.
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 second quarter of 2026 was $6.8 million, a decrease of $4.3 million from $11.1 million for the same period of the prior year. The provision for credit losses for the six months ended June 30, 2026 was $15.4 million, a decrease of $472 thousand from $15.9 million in provision for credit losses for the same period of the prior year. The decrease in provision for credit losses for the three and six months ended June 30, 2026, compared with the same periods in 2025, was due to improvements in credit quality, particularly in the C&I loan portfolio, and the reversal of provision for unfunded loan commitments in 2026.
Previous wording
The recapture of provision for unfunded loan commitments was $550 thousand and $400 thousand for the three months ended March 31, 2026 and 2025, respectively. The year-over-year increase in the recapture of provision for unfunded loan commitments was primarily due to the change in balances of unfunded loan commitments.
Current wording
The recapture of provision for unfunded loan commitments was $330 thousand and $880 thousand for the three and six months ended June 30, 2026, respectively, compared with a provision for unfunded loan commitments of $1.0 million and $600 thousand for the same periods of 2025, respectively. The year-over-year decrease 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, other customer-driven income and fees, net gains on sales of SBA loans, net gains on sales of investment securities AFS, and other noninterest income. Noninterest income for the first quarter of 2026 was $17.0 million, compared with $15.7 million for the same period of 2025, an increase of $1.3 million.
Current wording
Noninterest income consists primarily of service fees on deposit accounts, international service fees (fees received on trade finance letters of credit), wire transfer and foreign currency fees, other customer-driven income and fees, net gains on sales of SBA loans, net gains (losses) on sales of investment securities AFS, and other noninterest income. Noninterest income for the second quarter of 2026 was $18.9 million, compared with noninterest loss of $23.0 million for the same period of 2025, an increase of $41.8 million. Noninterest income for the six months ended June 30, 2026, was $35.8 million, compared with noninterest loss of $7.3 million for the same period of the prior year, an increase of $43.1 million.
Previous wording
The year-over-year increase in noninterest income for the three months ended March 31, 2026, was primarily driven by increases in other customer-driven income and fees, net gains on sales of AFS securities, and service fees on deposit accounts, partially offset by a decrease in other noninterest income.
Current wording
The year-over-year increase in noninterest income for the three and six months ended June 30, 2026, was primarily driven by net gains on sales of AFS securities compared with prior-year net losses on sales of AFS securities, and an increase in other customer-driven income and fees, partially offset by a decrease in other noninterest income. The noninterest loss for 2025 was primarily driven by the investment securities portfolio repositioning which resulted in a net loss of $38.9 million for the three and six months ended June 30, 2025.
Previous wording
During the three months ended March 31, 2026 and 2025, we sold $53.0 million and $49.9 million in SBA guaranteed loans, respectively, and recorded $3.3 million and $3.1 million, respectively, in net gains on sale of SBA loans.
Current wording
During the three and six months ended June 30, 2026, we sold $67.9 million and $120.9 million in SBA guaranteed loans, respectively, and recorded $4.4 million and $7.7 million, respectively, in net gains on sale of SBA loans. This compares with net gains of $4.0 million and $7.1 million for the three and six months ended June 30, 2025, respectively. $67.4 million and $117.3 million in SBA guaranteed loans were sold for the three and six months ended June 30, 2025, respectively.
Previous wording
Other noninterest income for the three months ended March 31, 2026, included a decrease of $1.5 million in net gains on sale of other loans, compared with the same period of 2025.
Current wording
Other noninterest income decreased $358 thousand for the three months ended June 30, 2026, and $1.7 million for the six months ended June 30, 2026, compared with the same periods in 2025. The six-month decrease was mainly driven by a $1.5 million decrease in net gains on sale of other loans.
Previous wording
Noninterest expense for the first quarter of 2026 was $94.5 million, an increase of $10.6 million, or 12.6%, from $83.9 million for the first quarter of 2025. Noninterest expense included merger and restructuring-related costs, which we consider notable items. Excluding notable items, noninterest expense for the first quarter of 2026 was $94.3 million compared with $81.3 million in the year-ago period. See the “General” section of this MD&A for a reconciliation of GAAP to non-GAAP financial measures.
Current wording
Noninterest expense for the second quarter of 2026 was $98.5 million, a decrease of $11.0 million, or 10.1%, from $109.5 million for the second quarter of 2025. Noninterest expense for the six months ended June 30, 2026, was $192.9 million, a decrease of $415 thousand, or 0.2%, from $193.3 million for the same period of the prior year. Noninterest expense included merger-related costs, which we consider a notable item. Excluding notable items, noninterest expense for the second quarter of 2026 was $96.4 million compared with $92.2 million in the year-ago period. Excluding notable items, noninterest expense for the six months ended June 30, 2026, was $190.7 million compared with $173.5 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 months ended March 31, 2026, compared with the same period of 2025, was primarily driven by increases in salaries and employee benefits; occupancy, furniture and equipment; software; and data and item processing, partially offset by a decrease in merger and restructuring-related costs.
Current wording
The year-over-year decrease in noninterest expense for the three and six months ended June 30, 2026, compared with the same periods of 2025, was primarily driven by decreases in merger-related costs and earned interest credit expense, partially offset by increases in salaries and employee benefits; software and subscriptions; occupancy, furniture and equipment; and data and item processing. We closed the acquisition of Territorial on April 2, 2025, and the year-to-date second quarter of 2025 included one quarter of operating expenses related to the Territorial franchise, compared with two quarters for 2026.
Previous wording
Salaries and employee benefits expense increased $7.8 million, or 16.0%, for the first quarter of 2026, compared with the same period of 2025. The year-over-year increase in salaries and employee benefits was primarily due to an increase in headcount following the 2025 Territorial acquisition. The number of full-time equivalent employees was 1,424 and 1,227 at March 31, 2026 and 2025, respectively.
Current wording
Salaries and employee benefits expense increased $4.1 million, or 7.7%, for the second quarter of 2026, compared with the same period of 2025, and increased $11.8 million, or 11.7%, for the six months ended June 30, 2026, compared with the same period in 2025. The year-over-year increase in salaries and employee benefits was due to an increase in headcount following the 2025 Territorial acquisition, as well as additional hires in 2026. The number of full-time equivalent employees was 1,432 and 1,416 at June 30, 2026 and 2025, respectively.
Previous wording
Merger and restructuring-related costs decreased $2.3 million, or 90.7%, for the first quarter of 2026, compared with the same period of 2025. Merger and restructuring-related costs mainly comprised employee retention bonuses and professional fees related to the Territorial acquisition, which was completed on April 2, 2025. See Note 15 - “Acquisitions” of the Notes to Consolidated Financial Statements for additional information regarding the Merger.
Current wording
Merger-related costs decreased $15.2 million, or 88.1%, for the second quarter of 2026, compared with the same period of 2025, and decreased $17.5 million, or 88.4%, for the six months ended June 30, 2026, compared with the same period in 2025. Merger-related costs mainly comprised employee retention bonuses and professional fees related to the Territorial acquisition, which was completed on April 2, 2025. In addition, we incurred $1.9 million in merger expenses related to the SMBC acquisition in the second quarter of 2026. See Note 15 - “Acquisitions” of the Notes to Consolidated Financial Statements for additional information regarding the Merger and SMBC acquisition.
Previous wording
The year-over-year changes in the income tax provision or benefit, as well as the effective tax rates, for the three months ended March 31, 2026, compared with the three months ended March 31, 2025, reflected the impact of renewable energy tax credit investments made in the first quarter of 2026 and a lower California state tax apportionment.
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 six months ended June 30, 2026, compared with the three and six months ended June 30, 2025, reflected the impact legislative changes in a significant state jurisdiction enacted and the impact of merger-related costs and securities portfolio sales in the second quarter of 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 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 months ended March 31, 2026 and 2025, total tax credits and other tax benefits related to our investment in affordable housing partnerships were approximately $2.3 million and $2.7 million, 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 six months ended June 30, 2026, total tax credits related to our investment in affordable housing partnerships were approximately $2.2 million and $4.5 million, respectively. This compares with approximately $2.3 million and $4.6 million in tax credits related to our investment in affordable housing partnerships for the same periods in 2025, respectively.
Previous wording
In addition to affordable housing partnerships, we 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 months ended March 31, 2026 and 2025, the total generated renewable energy tax credits and benefits was $8.1 million and $350 thousand, respectively. This was partially offset by amortization on the investments, which was $7.0 million and $319 thousand for the three months ended March 31, 2026 and 2025, respectively.
Current wording
In addition to affordable housing partnerships, we 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 months ended June 30, 2026 and 2025, the total generated renewable energy tax credits and benefits was $6.3 million and $350 thousand, respectively. This was partially offset by amortization on the investments, which was $5.4 million and $319 thousand for the three months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026 and 2025, the total generated renewable energy tax credits and benefits was $14.4 million and $700 thousand, respectively. This was partially offset by amortization on the investments, which was $12.4 million and $638 thousand for the six months ended June 30, 2026 and 2025, respectively.
Previous wording
At March 31, 2026, total assets were $18.66 billion, an increase of $125.2 million, or 0.7%, from $18.53 billion at December 31, 2025. The increase in total assets was primarily due to increases in investment securities and cash and cash equivalents, partially offset by a decrease in loans receivable during the three months ended March 31, 2026.
Current wording
At June 30, 2026, total assets were $18.99 billion, an increase of $460.3 million, or 2.5%, from $18.53 billion at December 31, 2025. The increase in total assets was primarily due to increases in loans receivable, investment securities and cash and cash equivalents during the six months ended June 30, 2026.
Previous wording
At March 31, 2026, we had $1.95 billion in investment securities AFS, compared with $1.83 billion at December 31, 2025. The net unrealized loss on the investment securities AFS at March 31, 2026, was $194.6 million, compared with a net unrealized loss on securities AFS of $185.3 million at December 31, 2025. The year-to-date increase in net unrealized loss position reflected movements in market interest rates during the period. At March 31, 2026, we had $236.1 million in investment securities HTM, compared with $239.8 million at December 31, 2025. We have the ability and intent to hold securities classified as HTM to maturity.
Current wording
At June 30, 2026, we had $1.95 billion in investment securities AFS, compared with $1.83 billion at December 31, 2025. The net unrealized loss on the investment securities AFS at June 30, 2026, was $200.5 million, compared with a net unrealized loss on securities AFS of $185.3 million at December 31, 2025. The year-to-date increase in net unrealized loss position reflected movements in market interest rates during the period. At June 30, 2026, we had $232.4 million in investment securities HTM, compared with $239.8 million at December 31, 2025. We have the ability and intent to hold securities classified as HTM to maturity.
Previous wording
During the three months ended March 31, 2026, $277.9 million in investment securities was purchased, $34.1 million in investment securities was sold, $54.5 million in investment securities was paid down, and $68.5 million in investment securities was called.
Current wording
During the six months ended June 30, 2026, $493.3 million in investment securities was purchased, $156.0 million in investment securities was sold, $108.7 million in investment securities was paid down, and $111.0 million in investment securities was called or matured.
Previous wording
We performed an analysis on our investment securities in unrealized loss positions at March 31, 2026 and December 31, 2025, and determined that an allowance for credit losses was not required for investment securities AFS or HTM. The majority of our investment portfolio consisted of securities issued by U.S. Government agencies or U.S. Government sponsored enterprises, which were determined to have a zero loss expectation. At March 31, 2026, we also had four asset-backed securities, five corporate securities, and 30 municipal bonds not issued by U.S. Government agencies or U.S. Government sponsored enterprises that were in unrealized loss positions. Based on our analysis of these investment securities, we concluded a credit loss did not exist due to the strength of the issuers, high bond ratings, and because full payment of principal and interest is expected.
Current wording
We performed an analysis on our investment securities in unrealized loss positions at June 30, 2026 and December 31, 2025, and determined that an allowance for credit losses was not required for investment securities AFS or HTM. The majority of our investment portfolio consisted of securities issued by U.S. Government agencies or U.S. Government sponsored enterprises, which were determined to have a zero loss expectation. At June 30, 2026, we also had two asset-backed securities, five corporate securities, and 28 municipal bonds not issued by U.S. Government agencies or U.S. Government sponsored enterprises that were in unrealized loss positions. Based on our analysis of these investment securities, we concluded a credit loss did not exist due to the strength of the issuers, high bond ratings, and because full payment of principal and interest is expected.
Previous wording
At March 31, 2026, loans receivable totaled $14.64 billion, a decrease of $61.3 million, or 0.4%, from $14.70 billion at December 31, 2025. The following table summarizes our loan portfolio by amount and percentage of total loans outstanding in each loan segment as of the dates indicated:
Current wording
At June 30, 2026, loans receivable totaled $14.94 billion, an increase of $240.5 million, or 1.6%, from $14.70 billion at December 31, 2025. The following table summarizes our loan portfolio by amount and percentage of total loans outstanding in each loan segment as of the dates indicated:
Previous wording
Nonperforming assets, which consist of nonaccrual loans, accruing delinquent loans past due 90 days or more, and OREO, totaled $120.5 million at March 31, 2026, compared with $136.1 million at December 31, 2025, a decrease of 11.4%. The year-to-date decrease in nonperforming loans was largely driven by the payoff of a large CRE nonaccrual loan during the first quarter of 2026. The ratio of nonperforming assets to total assets decreased to 0.65% at March 31, 2026, compared with 0.73% at December 31, 2025. Nonaccrual loans to loans receivable was 0.75% at March 31, 2026, decreased from 0.90% at December 31, 2025.
Current wording
Nonperforming assets, which consist of nonaccrual loans, accruing delinquent loans past due 90 days or more, and OREO, totaled $112.9 million at June 30, 2026, compared with $136.1 million at December 31, 2025, a decrease of 17.1%. The year-to-date decrease in nonperforming loans was largely driven by the payoff of a large CRE nonaccrual loan during the first quarter of 2026 and a reduction in accruing delinquent loans past due 90 days or more during the second quarter of 2026. The ratio of nonperforming assets to total assets decreased to 0.59% at June 30, 2026, compared with 0.73% at December 31, 2025. Nonaccrual loans to loans receivable was 0.75% at June 30, 2026, down from 0.90% at December 31, 2025.
Previous wording
(1) Nonaccrual loans exclude the guaranteed portion of delinquent SBA loans that are in liquidation totaling $19.4 million at March 31, 2026, and $15.6 million at December 31, 2025.
Current wording
(1) Nonaccrual loans exclude the guaranteed portion of delinquent SBA loans that are in liquidation totaling $17.1 million at June 30, 2026, and $15.6 million at December 31, 2025.
Previous wording
The ACL was $155.1 million at March 31, 2026, compared with $156.7 million at December 31, 2025. The ACL coverage ratio was 1.06% and 1.07% of loans receivable at March 31, 2026 and December 31, 2025, respectively. The following table reflects the allocation of the ACL by loan segment and the ratio of total ACL to total loans as of the dates indicated:
Current wording
The ACL was $153.2 million at June 30, 2026, compared with $156.7 million at December 31, 2025. The ACL coverage ratio was 1.03% and 1.07% of loans receivable at June 30, 2026 and December 31, 2025, respectively. The following table reflects the allocation of the ACL by loan segment and the ratio of total ACL to total loans as of the dates indicated:
Previous wording
The decrease in ACL at March 31, 2026, compared with December 31, 2025, was due to a decrease in ACL for C&I loans, which was due to overall improvements in credit metrics for C&I loans as result of charge offs made during the quarter to resolve problem loans. The ACL for CRE loans increased from December 31, 2025 to March 31, 2026, primarily driven by a weakening in the commercial real estate price index forecasts from December 31, 2025 to March 31, 2026. The third-party economic forecast used in the calculation at March 31, 2026, projected slightly higher GDP growth but lower growth in the CRE price index and unemployment rates remained largely unchanged relative to the forecast used at December 31, 2025.
Current wording
The decrease in ACL at June 30, 2026, compared with December 31, 2025, was due to a decrease in ACL for C&I loans, which was due to overall improvements in credit metrics for C&I loans as a result of loan sales and charge offs made during the first half of 2026 to resolve problem loans. The ACL for CRE loans increased from December 31, 2025 to June 30, 2026, primarily driven by increased refinance risk and downgrade of CRE loans from December 31, 2025 to June 30, 2026. The third-party economic forecast used in the calculation at June 30, 2026, projected slightly higher GDP growth and growth in the CRE price index, and unemployment rates remained largely unchanged relative to the forecast used at December 31, 2025.
Previous wording
Net loan charge offs as a percentage of average loans were 0.29%, annualized, for the three months ended March 31, 2026, compared with net loans charge offs of 0.25%, annualized, for the same period in 2025. Net loan charge offs for the three months ended March 31, 2026, primarily reflected C&I loan net charge offs of $9.9 million.
Current wording
Net loan charge offs as a percentage of average loans were 0.24% and 0.27%, annualized, for the three and six months ended June 30, 2026, respectively, compared with net loans charge offs of 0.33% and 0.29%, respectively, for the same periods in 2025. Net loan charge offs for the three and six months ended June 30, 2026, primarily reflected C&I loan net charge offs of $8.7 million and $18.6 million, respectively.
Previous wording
We believe the ACL at March 31, 2026 was adequate to absorb current expected lifetime losses in the loan portfolio. However, there is no assurance that actual losses will not exceed the current estimated credit losses. Among other things, if the effects of the tariffs, global trade tensions, inflation, potential economic recession, and the wars in Iran, the Gaza Strip, and Ukraine are worse than currently expected, or if the effects are prolonged, actual losses could exceed the estimated credit losses, which could have a material and adverse effect on our financial condition and results of operations.
Current wording
We believe the ACL at June 30, 2026 was adequate to absorb current expected lifetime losses in the loan portfolio. However, there is no assurance that actual losses will not exceed the current estimated credit losses. Among other things, if the effects of tariffs, global trade tensions, inflation, potential economic recession, unrest in the Middle East, and the wars in the Gaza Strip and Ukraine are worse than currently expected, or if the effects are prolonged, actual losses could exceed the estimated credit losses, which could have a material and adverse effect on our financial condition and results of operations.
Previous wording
At March 31, 2026, we had $45.2 million in accrued interest receivables on loans, compared with $43.5 million at December 31, 2025.
Current wording
At June 30, 2026, we had $44.4 million in accrued interest receivables on loans, compared with $43.5 million at December 31, 2025.
Previous wording
At March 31, 2026, we had $30.0 million in investments in affordable housing partnerships, compared with $27.9 million at December 31, 2025. The increase in investments in affordable housing partnerships primarily reflected investment in affordable housing partnerships of $4.5 million, partially offset by amortization during the three months ended March 31, 2026. Off-balance sheet commitments to fund investments in affordable housing partnerships totaled $16.0 million and $20.5 million at March 31, 2026 and December 31, 2025, respectively. Investments in affordable housing partnerships provide low-income housing tax credits.
Current wording
At June 30, 2026, we had $31.7 million in investments in affordable housing partnerships, compared with $27.9 million at December 31, 2025. The increase in investments in affordable housing partnerships primarily reflected investment in affordable housing partnerships of $8.8 million, partially offset by amortization during the six months ended June 30, 2026. Off-balance sheet commitments to fund investments in affordable housing partnerships totaled $36.7 million and $20.5 million at June 30, 2026 and December 31, 2025, respectively. Investments in affordable housing partnerships provide low-income housing tax credits.
Previous wording
At March 31, 2026, we had $30.4 million in investments in renewable energy tax credits on the Consolidated Statements of Financial Condition, compared with $12.4 million at December 31, 2025, which was recorded in other assets. At March 31, 2026 and December 31, 2025, unfunded commitments were $39.6 million and $12.4 million, respectively, which were recorded in other liabilities. The increase in both investments in renewable energy tax credits and their unfunded commitments reflected new investments made. During the three months ended March 31, 2026, we made new commitments to invest $25.0 million in renewable energy tax credit investments.
Current wording
At June 30, 2026, we had $21.7 million in investments in renewable energy tax credits on the Consolidated Statements of Financial Condition, compared with $12.4 million at December 31, 2025. These investments were recorded as part of other assets. At June 30, 2026 and December 31, 2025, unfunded commitments were $29.0 million and $12.4 million, respectively, which were recorded in other liabilities. The increase in both investments in renewable energy tax credits and their unfunded commitments reflected new investments made. During the six months ended June 30, 2026, we made new commitments to invest $25.0 million in renewable energy tax credit investments.
Showing the first 40 of 51 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Net interest income was $129.0 million for the second quarter of 2026, compared with $117.5 million for the same period of 2025, an increase of $11.5 million, or 9.8%. The year-over-year increase in net interest income was primarily driven by a lower cost of deposits, a decrease in the average balance of interest bearing deposits, and an increase in the average balance of interest earning assets, partially offset by lower yields on loans. As of June 30, 2026, the Federal Funds target rate was cut by an aggregate 75 basis points since June 30, 2025, favorably impacting funding costs for the second quarter of 2026 compared with the prior-year period.
Current report — wording carried from elsewhere
(1)Interest income on loans includes loan fees.
Current report — wording carried from elsewhere
(2)Average balances of loans consist of loans receivable and loans held for sale.
Current report — wording carried from elsewhere
(3)Interest income and yields are not presented on a tax-equivalent basis.