Hope Bancorp (HOPE)

Regional banking company Hope Bancorp (NASDAQ:HOPE) reported Q4 CY2025 results topping the market’s revenue expectations, with sales up 26.1% year on year to $145.8 million. Its non-GAAP profit of $0.27 per share was 3.8% above analysts’ consensus estimates.

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.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Hope Bancorp competes with other regional banks serving similar markets, including East West Bancorp (NASDAQ:EWBC), Hanmi Financial (NASDAQ:HAFC), and BBCN Bancorp, as well as larger national institutions like JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) in its operating regions.

Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities. Unfortunately, Hope Bancorp struggled to consistently increase demand as its $535.2 million of revenue for the trailing 12 months was close to its revenue five years ago. This wasn’t a great result 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 3% 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 reported robust year-on-year revenue growth of 26.1%, and its $145.8 million of revenue topped Wall Street estimates by 1.7%.

Net interest income made up 91.3% 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.

Topline growth carries importance, but the overall profitability behind this expansion determines true value creation. For banks, the efficiency ratio captures this relationship by measuring non-interest expenses, including salaries, facilities, technology, and marketing, against total revenue.

Markets emphasize efficiency ratio trends over static measurements, recognizing that revenue compositions drive different expense bases. Lower efficiency ratios signal superior performance by indicating that banks are controlling costs effectively relative to their income.

Over the last five years, Hope Bancorp’s efficiency ratio has increased by 14.5 percentage points, going from 53.4% to 69.2%. Said differently, the company’s expenses have increased at a faster rate than revenue, which usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

Hope Bancorp’s efficiency ratio came in at 68.2% this quarter, falling short of analysts’ expectations by 158 basis points (100 basis points = 1 percentage point).

For the next 12 months, Wall Street expects Hope Bancorp to rein in some of its expenses as it anticipates an efficiency ratio of 63.3%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Hope Bancorp’s EPS was flat over the last five years, just like its revenue. This performance was underwhelming across the board.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Hope Bancorp’s two-year annual EPS declines of 14.1% were bad and lower than its two-year revenue losses.

We can take a deeper look into Hope Bancorp’s earnings to better understand the drivers of its performance. A two-year view shows Hope Bancorp has diluted its shareholders, growing its share count by 6.6%. This has led to lower per share earnings. Taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q4, Hope Bancorp reported adjusted EPS of $0.27, up from $0.20 in the same quarter last year. This print beat analysts’ estimates by 3.8%. Over the next 12 months, Wall Street expects Hope Bancorp’s full-year EPS of $0.90 to grow 31.7%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

Hope Bancorp’s TBVPS grew at a sluggish 1.4% annual clip over the last five years. TBVPS growth has also decelerated a bit recently as it was flat over the last two years at roughly $13.71 per share.

Over the next 12 months, Consensus estimates call for Hope Bancorp’s TBVPS to grow by 4.7% to $14.36, lousy growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Hope Bancorp has averaged a Tier 1 capital ratio of 12.6%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Hope Bancorp has averaged an ROE of 6.9%, uninspiring for a company operating in a sector where the average shakes out around 7.5%.

It was encouraging to see Hope Bancorp beat analysts’ revenue and EPS expectations this quarter. On the other hand, its net interest income missed. Overall, we think this was still a decent quarter. The stock remained flat at $11.78 immediately following the results.

Updated: January 27, 2026 at 7:49 AM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Hope Bancorp.

Hope Bancorp doesn’t pass our quality test. First off, its revenue growth was weak over the last five years. And while its anticipated efficiency ratio over the next year signals it will gain leverage on its fixed costs, the downside is its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders. On top of that, its net interest income growth was weak over the last five years.

Hope Bancorp’s P/B ratio based on the next 12 months is 0.6x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $12.63 on the company (compared to the current share price of $11.78).