EARNINGS PER SHARE (“EPS”)
Earnings per share are computed by dividing net income by the weighted average number of common shares outstanding for the period. Basic EPS does not reflect the possibility of dilution that could result from the issuance of additional shares of common stock upon exercise or conversion of outstanding equity awards or convertible notes. Diluted EPS reflects the potential dilution that could occur if stock options, convertible notes, employee stock purchase program (“ESPP”) shares, or other contracts to issue common stock were exercised or converted to common stock that would then share in earnings. For the years ended December 31, 2025, 2024, and 2023, stock options and restricted share awards of 493,106, 494,883, and 866,959 shares of common stock, respectively, were excluded in computing diluted earnings per common share because they were anti-dilutive.
Pursuant to the Territorial Merger Agreement, on April 2, 2025, Territorial shareholders received 0.8048 shares of Hope Bancorp common stock in exchange for each share of Territorial common stock; accordingly, the Company issued 6,976,754 shares, or $73.3 million of equity, as part of the transaction, based on the closing price of the Company’s common stock on April 2, 2025. The Company previously issued $217.5 million in convertible senior notes maturing on May 15, 2038, of which $444 thousand remained outstanding at December 31, 2025. The convertible notes can be converted into the Company’s shares of common stock at an initial rate of 45.0760 shares per $1,000 principal amount of the notes (See Note 10 “Convertible Notes and Subordinated Debentures” for additional information regarding convertible notes issued). For the years ended December 31, 2025, 2024, and 2023, shares related to the convertible notes issued were not included in the Company’s diluted EPS calculation. In accordance with the terms of the convertible notes and settlement options available to the Company, no shares would have been delivered to investors of the convertible notes upon assumed conversion based on the Company’s common stock price during the years ended December 31, 2025, 2024, and 2023 as the conversion price exceeded the market price of the Company’s stock. In 2022, the Company’s Board of Directors approved a share repurchase program that authorizes the Company to repurchase $50.0 million of its common stock. In December 2025, the Board of Directors reaffirmed the share repurchase program, which had $35.3 million remaining that was available at December 31, 2025. During the years ended December 31, 2023, 2024 and 2025, the Company did not repurchase any shares of common stock as part of the share repurchase program.
The following table presents the computation of basic and diluted EPS for the years ended December 31, 2025, 2024, and 2023.
| | | | | | | | | | | | | | | | | |
| Net Income
(Numerator) | | Weighted-Average Shares
(Denominator) | | Earnings
Per
Share |
| (Dollars in thousands, except share and per share data) |
| 2025 | | | | | |
| Basic EPS - common stock | $ | 61,588 | | | 126,317,986 | | | $ | 0.49 | |
| Effect of dilutive securities: | | | | | |
Stock options and restricted stock | | | 456,566 | | | |
| Diluted EPS - common stock | $ | 61,588 | | | 126,774,552 | | | $ | 0.49 | |
| | | | | |
| 2024 | | | | | |
| Basic EPS - common stock | $ | 99,630 | | | 120,583,147 | | | $ | 0.83 | |
| Effect of dilutive securities: | | | | | |
| Stock options and restricted stock | | | 525,447 | | | |
| Diluted EPS - common stock | $ | 99,630 | | | 121,108,594 | | | $ | 0.82 | |
| | | | | |
| 2023 | | | | | |
| Basic EPS - common stock | $ | 133,673 | | | 119,906,109 | | | $ | 1.11 | |
| Effect of dilutive securities: | | | | | |
| Stock options and restricted stock | | | 487,148 | | | |
| Diluted EPS - common stock | $ | 133,673 | | | 120,393,257 | | | $ | 1.11 | |
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.