Hope Bancorp, Inc.

Good morning and welcome to the HOPE Bancorp 2023 Second Quarter Earnings Conference Call. All participants will be in listen-only mode. Should you need 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 touchtone phone. Please note this event is being recorded. I would like now to turn the conference over to Angie Yang, Director of Investor Relations. Please go ahead.

Thank you, Alan. Good morning, everyone, and thank you for joining us for the Hope Bancorp 2023 Second Quarter Investor Conference Call. As usual, we will be using a slide presentation to accompany our discussion this morning, which is available in the presentations page of our IR website. Beginning on slide two, let me begin with a brief statement regarding forward-looking remarks. The call today may contain forward-looking projections regarding future financial performance of the company and future events. These statements may differ materially from the actual results due to certain risks and uncertainties. In addition, some of the information referenced on this call today are non-GAAP financial measures. For a more detailed description of the risk factors and a reconciliation of GAAP to non-GAAP financial measures, please refer to the company's filings with the SEC, as well as the Safe Harbor, as well as, sorry, as well as the Safe Harbor statements in our press release issued earlier today. Hope Bancorp assumes no obligation to revise any forward-looking projections that may be made on today's call. Now, we have allotted one hour for this call. Presenting from the management side today will be Kevin Kim, Hope Bank Corp's Chairman, President, and CEO, and Juliana Belisca, our Chief Financial Officer. Peter Koh, our Chief Operating Officer, is also 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.

Thank you, Angie, and good morning, everyone, and thank you for joining us today. Now, let's begin on slide three with a brief overview of the quarter. For the second quarter of 2023, our net income was $38 million, and our diluted earnings per share were 32 cents. Our pre-provisioned net revenue was $60 million, an increase of 11% from the first quarter. Our asset quality remains healthy and we recorded net recoveries of $552,000 in the second quarter. The operating environment for regional banks continues to be challenging and we are focused on prudent risk management, maintaining high liquidity levels, and building strong capital. Our tangible common equity ratio increased to 8.04% at June 30 of 2023, up 13 basis points from March 31. Quarter over quarter, our risk-based capital grew and ratios expanded. Continuing on slide four for a more detailed review of our strong capital position. Our company's total capital was $2.1 billion at June 30, 2023, growing 2% quarter over quarter. At June 30, our common equity tier one ratio was 11.06% up 31 basis points from March 31st. And our total capital ratio was 12.64% up 39 basis points quarter over quarter. Adjusting for the allowance for credit losses and including hypothetical adjustments for investment security marks, all of our capital ratios remain high. Given the strength of our capital, our board of directors declared a quarterly common stock dividend of 14 cents per share payable on August 17th to the stockholders of record as of August 3rd. Moving on to slide five. During the second quarter, we continued to maintain a higher than usual level of cash and cash equivalents on our balance sheet and we believe this is prudent in the current banking environment. At June 30th of 2023, our cash and cash equivalents were $2.3 billion, compared with $2.2 billion at March 31st. At the end of the second quarter, our available borrowing capacity, together with cash and cash equivalents and unplatched investment securities, was $7.75 billion, equivalent to 50% of our total deposits and well exceeding our uninsured deposit balances. In May, we paid off $197 million of our convertible notes with existing cash. Now continuing to slide six, at June 30 of 2023, our total deposits were $15.6 billion, down modestly 1%, quarter of a quarter, and up 4% year-over-year. In navigating this cycle, Bank of Hope has benefited from the granularity of our deposits. Our average commercial account size is approximately $300,000, and the average consumer account size is approximately $50,000. Over a third of our balance is consumer deposits, which are up 3% year-to-date and 13% year over year. We believe this is reflective of the strength and longevity of our relationships with our depositors. At June 30 of 2023, the bank's uninsured deposit ratio was 36% compared with 38% at March 31st. Across the organization, we are focused on strengthening our deposit franchise and expanding our relationships with our clients. We have been steadily investing in our treasury management products and services, and the efforts of our team have been generating a steady pace of growth in the number of new TMS relationships, increasing the stickiness of our demand deposits. Now, moving on to slide seven. In the second quarter, we funded $491 million in new loans, including $332 million in commercial and industrial loan production. The decrease in loan production reflects current market dynamics, including declining customer demand in a high interest rate environment, as well as our disciplined pricing and conservative underwriting. The average rate on our new loan production was 8.37% in the second quarter, up 84 basis points from the first quarter. Moving on to slide eight. At June 30 of 2023, our loans receivable were $14.9 billion, a decrease of 1% quarter over quarter, and up 2% year over year. Second quarter pay-offs and pay-downs of $647 million exceeded the volume of new loan originations. Our portfolio is well balanced between the major loan types of commercial real estate, including owner-occupied commercial real estate and multifamily mortgage, commercial and industrial, and residential mortgage loans. Our commercial and industrial loan portfolio is well diversified by industry. Moving on to slides 9 and 10 for an overview of our commercial real estate portfolio. Our commercial real estate loans are well diversified by property type. and have low loan-to-value ratios across all segments. Less than 3% of the portfolio has a loan-to-value ratio over 70%. The vast majority of our commercial real estate loans are full recourse with personal guarantees. Office commercial real estate is a small segment of $464 million, representing 3% of total loans and with no central business district exposure. At June 30 of 2023, 99% of our office portfolio was pass graded. Our commercial real estate portfolio is very granular with very few loans over $30 million in size. We are well diversified geographically across the sub markets in our footprint with very small exposure to markets such as San Francisco or Manhattan. and no exposure to the central business district in downtown Los Angeles. With that, I will ask Juliana to provide additional details on our financial performance for the second quarter. Juliana?