Hope Bancorp, Inc.

Good day and welcome to the Hope Bank Corp's 2021 Third Quarter Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Angie Yang, Director of Investor Relations. Please go ahead.

Thank you, Matt. Good morning, everyone, and thank you for joining us for the Hope Bank Corp 2021 Third Quarter Investor Conference Call. As usual, we will be using a slide presentation to accompany our discussion this morning. If you have not done so already, please visit the presentation page of our Investor Relations website to download a copy of the presentation. Or if you are listening in through the webcast, you should be able to view the slides from your computer screen as we progress through the presentation. Beginning on slide two, let me begin with a brief statement regarding forward-looking remarks. The call today may contain forward-looking projections regarding the future financial performance of the company and future events. These statements are based on current expectations estimates, forecasts, projections, and management assumptions about the future performance of the company, including any impact as a result of the COVID-19 pandemic, as well as the businesses and markets in which the company does and is expected to operate. These statements constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance. Actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. We refer you to the documents the company files periodically with the FCC, as well as the safe harbor statements in our press release issued yesterday. Hope Bancorp assumes no obligation to revise any forward-looking projections that may be made on today's call. The company cautions that the complete financial results to be included in the quarterly report on Form 10-Q for the quarter ended September 30, 2021, could differ materially from the financial results being reported today. In addition, some of the information referenced on this call today are non-GAAP financial measures. Please refer to our 2021 third quarter earnings release for the reconciliation of GAAP to non-GAAP financial measures. Now, we have allotted one hour for this call, as usual. Presenting from the management side today will be Kevin Kemp, Hope Bancorp's Chairman, President, and CEO, and Alex Koh, Senior Executive Vice President and Chief Financial Officer. Peter Koh, our Deputy Chief Operating Officer, is here with us, as usual, and will be available for the Q&A session. With that, let me turn the call over to Kevin Kim. Kevin?

Thank you, Angie. Good morning, everyone, and thank you for joining us today. Let's begin on slide three with a brief overview of our financial results. We had a very productive quarter with increased profitability, record high loan originations, further enhanced deposit trends, and a significant improvement in our asset quality metrics. We generated net income of $55.5 million in the third quarter, or 45 cents per diluted share, up 3% from the preceding quarter. Pre-provision net revenue of $65.4 million represented an increase of 1.4% over the preceding second quarter. And our return on tangible common equity increased 21 basis points to 13.71% quarter-over-quarter. Newland production reached a record high and exceeded $1 billion for the first time in our history, up 13% quarter-over-quarter. Our deposit mix continued to shift favorably to lower-cost deposits with non-interest-bearing deposits increasing 7% quarter-over-quarter and accounting for 40% of total deposits which is also a record high. As expected, our efforts to de-risk the portfolio impacted growth in our total loans this quarter, although we continue to increase owning assets, which is driving higher net interest income. Our third quarter results included a $10 million release of our reserve for loan losses, reflecting the progress we have made in moving higher risk loans off our balance sheet and the improved performance we are seeing in our hotel, motel and retail CRE portfolios combined with an improving economy. During the third quarter, we sold $29.6 million of loans and moved another $131.6 million of potentially higher risk loans to help for sale at the end of the quarter contributing to the large decline in substandard loans during the quarter. At this point, we believe the process of de-risking the loan portfolio has been largely completed, and we are not anticipating a material amount of additional strategic loan sales in the fourth quarter. Given what has occurred, we believe we are well positioned to drive organic loan growth and enhance operational profitability in the quarters ahead. Moving on to slide four. As we indicated on our last call, we expected to see an acceleration of loan production as we entered the seasonally stronger second half of the year and economic conditions continue to improve. While the resurgence in COVID-19 cases and supply chain disruptions impacted the pace of the economic recovery, we were still able to have an exceptionally productive quarter of business development, leading to a record $1 billion in new loan production in this quarter. Compared with the prior quarter, our overall loan production increased by 13%, with strong performances occurring in all areas of our business, and In each segment, we achieved a higher level of production than we had in the preceding second quarter. In particular, commercial loan production increased 14% quarter over quarter to $344 million. Our corporate banking group continues to gain traction and develop new relationships with larger corporate clients, which is driving the higher level of commercial loan production, excluding PPP loans and strategic loan sales and transfers, our commercial loans outstanding balance would have grown 6% quarter over quarter. Over the last year, our corporate banking group has further expanded into telecom and healthcare with the addition of experienced business development and specialized credit teams in each of these verticals. And we are pleased to see the positive impact these teams are making to our overall loan production volumes. This production has been a significant driver of the diversification we have achieved over the last few years, and we will continue to opportunistically add experienced teams to supplement our growth. Our SBA loan production totaled $115 million in the third quarter, which is a record level of non-PPP production. Excluding the impact of PPPs and strategic loan sales and transfers, SBA loans in our portfolio would have increased 11% quarter-over-quarter. Our CRA loan production increased 14% quarter-over-quarter. As we have mentioned previously, we are looking to create a more diversified, lower risk profile commercial real estate portfolio and have been increasing our focus on multifamily loan origination over the last year. The stronger CRE loan production this quarter is largely attributable to the success we are having with this effort. New multifamily loans more than doubled quarter over quarter and accounted for approximately 12% of our total loan originations in the third quarter. This resulted in 20% growth in this portfolio from the end of the prior quarter. As part of our efforts to increase this loan segment, we recently recruited a highly experienced multifamily team led by an executive who joined us from a large money center bank. This is an attractive product that complements our existing portfolio and improved the diversification and lower level of risk associated with this lending segment are in line with our longer term strategic initiatives of enhancing franchise value. Overall, excluding PPP loans and the impact of the loan sales and transfers, we would have had total loan growth of 3% quarter over quarter or 12% on an annualized basis. This level of loan production is more reflective of the stronger business development capabilities of our franchise. In terms of our loan modification program granted under the CARES Act, we continue to see a steady decrease in the balances of our active loan modifications. At September 30th, modified loans decreased to below 1% of total loans, down from 2.4% as of June 30 of 2021. Our COVID-19 modifications have been maturing as scheduled. and we expect they will wind down to nearly zero by the end of the year. Now I will ask Alex to provide additional details on our financial performance for the third quarter. Alex?