Hope Bancorp, Inc.

Good morning and welcome to the HOPE Bancorp 2022 Second Quarter Earnings Conference Call. All participants will be in a listen-only mode. Should you need any assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to the Director of Investor Relations, Angie Yang. Please go ahead.

Thank you, Joe. Good morning, everyone, and thank you for joining us for the Hope Bank Corp 2022 Second 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 presentations 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 SEC, 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 June 30, 2022, 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 2022 second quarter earnings release for the reconciliation of GAAP to non-GAAP financial measures. Now, we have allotted one hour for this call. Presenting from the management side today will be Kevin Kim, host BainCorps Chairman, President, and CEO, and Alex Koh, Senior Executive Vice President and Chief Financial Officer. Peter Koh, Senior Executive Vice President and 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 delivered a very strong performance for the second quarter of 2022, highlighted by the highest level of loan production in the history of the bank. Loan production for the second quarter increased 25% quarter over quarter, or 44% year over year, and drove a 16% increase in our loans outstanding on an annualized basis, excluding PPP loans. Our net interest margin expanded 15 basis points from the preceding first quarter, and we continue to have success in driving down our criticized loan balances. We reported net income of $52.1 million or 43 cents per share in the second quarter. In terms of pre-provision net revenue, we generated $73.9 million, which represents an increase of 4% from the preceding first quarter and 15% from the year-ago second quarter. This performance resulted in our pre-provisioned net revenue return on assets increasing to 1.65% in the second quarter, up from 1.6% in the preceding first quarter, while pre-provisioned net revenue return on equity increased to 14.66% from 13.58%. Moving on to slide four. In the second quarter, we funded a record $1.3 billion in new loans. This represents the fourth consecutive quarter in which we produced more than $1 billion in total loan funding as we continue to benefit from the investments we have made to add banking talent and build expertise in new asset classes and vertical markets. We dispersed a record $557 million in new commercial loans during the second quarter, resulting in our commercial loan portfolio increasing at an annualized rate of 26%. As these commercial loans are variable rate loans, we are well positioned to benefit with the expected increases in interest rates. And I'm pleased to report that we also saw a significant increase in the average rate of new commercial loans from the preceding first quarter. The $557 million in commercial loan funding accounted for approximately 43% of our total loan fundings in the second quarter, which represents the progress we have made in strengthening our commercial banking platform and diversifying our business model and loan portfolio. Our corporate banking group generated approximately 90% of our commercial loan fundings during the second quarter, which reflects the progress we have made in moving up market and expanding our commercial client base to include more middle market enterprises. We are also benefiting from the teams we have built within our corporate banking group to focus on vertical markets like telecom, healthcare, and financial institutions, including broker dealers and asset managers. These verticals have been less impacted by supply chain constraints and inflationary pressures and have been more resistant to recessionary environments and geopolitical issues. In terms of commercial real estate, loan demand was relatively consistent with the prior quarter. We had $545 million of commercial real estate loan production, which also was booked at much higher rates than the preceding first quarter. The production was well diversified across property types, with the single largest contributor this quarter being multifamily, which accounted for 32% of our total CRA loan production in the quarter and continues to increase as a percentage of our overall CRE portfolio. Despite higher interest rates and a significant decline in demand for mortgage refinancing industry-wide, we had a 75% increase in residential mortgage production while maintaining strong underwriting criteria with average LTVs in the high 50 to low 60% range. The higher level of production reflects the successful expansion of our team into our eastern region, which has contributed to increased levels of purchase transactions. Overall, we saw very good trends in loan pricing in the second quarter, with the average rate on new loan originations increasing from the preceding quarter in each asset class, combined with the higher mix of commercial loan production This resulted in our average rate on total loan production increasing by 72 basis points compared with the preceding quarter. The investments we have made to strengthen our commercial banking platform have not only positively impacted loan production, but has made us less reliant on CRA lending as a growth driver. And this positions us well going into the second half of 2022. In addition, our expanded commercial banking platform has enhanced our deposit gathering capabilities. Deposits from larger commercial enterprises, primarily generated through our corporate banking group, as well as our efforts to target U.S. subsidiaries of Korean corporations, now account for approximately 23% of our total deposits. and we are consistently generating new commercial deposit relationships each quarter, which is providing a steady inflow of core deposits. Now, I will ask Alex to provide additional details on our financial performance for the second quarter. Alex?