Regional banking company Hope Bancorp (NASDAQ:HOPE) missed Wall Street’s revenue expectations in Q2 CY2025, with sales falling 19.1% year on year to $94.58 million. Its non-GAAP profit of $0.19 per share was 8.4% below analysts’ consensus estimates.
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Hope Bancorp (HOPE) Q2 CY2025 Highlights:
- Net Interest Income: $117.5 million vs analyst estimates of $116.3 million (11% year-on-year growth, 1% beat)
- Net Interest Margin: 2.7% vs analyst estimates of 2.7% (7 basis point year-on-year increase, in line)
- Revenue: $94.58 million vs analyst estimates of $110.9 million (19.1% year-on-year decline, 14.7% miss)
- Efficiency Ratio: 116% vs analyst estimates of 67.5% (48.2 percentage point miss)
- Adjusted EPS: $0.19 vs analyst expectations of $0.21 (8.4% miss)
- Market Capitalization: $1.45 billion
“The second quarter of 2025 was a milestone quarter for Hope Bancorp as we completed the acquisition of Territorial Bancorp Inc. and expanded into the strategically important market of Hawaii,” said Kevin S. Kim, Chairman, President and Chief Executive Officer.
Company Overview
With roots in serving Korean-American communities and now expanded to a multi-ethnic clientele across 12 states, Hope Bancorp (NASDAQ:HOPE) operates Bank of Hope, providing commercial and retail banking services with a focus on serving multi-ethnic communities across the United States.
Sales Growth
From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions.
Hope Bancorp struggled to consistently generate demand over the last five years as its revenue dropped at a 2.6% annual rate. This was below our standards and is a sign of poor business quality.
We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Hope Bancorp’s recent performance shows its demand remained suppressed as its revenue has declined by 15.1% annually over the last two years.
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
This quarter, Hope Bancorp missed Wall Street’s estimates due to a loss on its investment portfolio and reported a rather uninspiring 19.1% year-on-year revenue decline, generating $94.58 million of revenue.
Net interest income made up 93.3% of the company’s total revenue during the last five years, meaning Hope Bancorp lives and dies by its lending activities because non-interest income barely moves the needle.
Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics.
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Tangible Book Value Per Share (TBVPS)
Banks are balance sheet-driven businesses because they generate earnings primarily through borrowing and lending. They’re also valued based on their balance sheet strength and ability to compound book value (another name for shareholders’ equity) over time.
This is why we consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.
Hope Bancorp’s TBVPS was flat over the last five years. The last two years unveil a similar pattern as TBVPS was roughly flat at $13.26 per share.
Over the next 12 months, Consensus estimates call for Hope Bancorp’s TBVPS to grow by 3.8% to $13.77, paltry growth rate.
Key Takeaways from Hope Bancorp’s Q2 Results
It was good to see Hope Bancorp narrowly top analysts’ tangible book value per share expectations this quarter. We were also happy its net interest income narrowly outperformed Wall Street’s estimates. On the other hand, its revenue and EPS missed due to a loss on its investment portfolio. Overall, this was a decent quarter excluding the write-off. The stock traded up 2.5% to $11.65 immediately following the results.
Is Hope Bancorp an attractive investment opportunity right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.