Hope Bancorp, Inc.

Good afternoon and welcome to the HOPE Bancorp 2023 Fourth Quarter Earnings Conference Call. All participants will be in a 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 telephone keypad. 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, Daniel. Good morning, everyone, and thank you for joining us for the Hope Bank Work 2023 Fourth 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 Investor Relations website. Beginning on slide two, let me begin with a brief statement regarding forward-looking remarks. The call today contains forward-looking projections regarding the future financial performance of the company and future events. These statements may differ materially from 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 statements in our press release issued this morning. 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 Bancorp's chairman, president, and CEO, Juliana Beliska, our Chief Financial Officer, and 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. Kevin?

Thank you, Angie. 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 fourth quarter of 2023, we earned net income of $26.5 million or 22 cents per diluted share. Income this quarter included two notable items, the FDIC special assessment of $3.1 million after tax and restructuring charge of $8.7 million after tax. Excluding these notable items, our net income was $38 million up 26 percent quarter-over-quarter, and our earnings per share were 32 cents, up 28 percent quarter-over-quarter. A continued focus on expense management and meaningful improvements in our asset quality were important drivers of our net income growth this quarter. In October of 2023, we announced a strategic reorganization designed to enhance shareholder value over the long term. We realigned our structure around key lines of business and products, positioning Bank of Hope to operate more efficiently, support high-quality loan and deposit growth, and deliver improved returns in the years to come. We are making substantial progress on this transformation, focusing management efforts and attention on process and efficiency improvement to empower our frontline to grow their portfolios and expand customer relationships. As part of the reorganization plan, and as previously announced, we will consolidate certain branches in the first quarter, in the first half of 2024, the cost of which was accrued as part of the fourth quarter 2023 restructuring charges. Continuing on to slide four, We ended the year with a very strong capital position, and all our capital ratios expanded from September 30 of 2023. We grew tangible book value 6%, quarter over quarter, and year over year. As of December 31 of 2023, our total capital ratio was 13.92%, up 69 basis points from September 30, And our common equity tier one ratio was 12.28%, up 61 basis points, quarter of a quarter. Adjusting for the allowance for credit losses and including hypothetical adjustments for investment security marks, all our capital ratios remain high. Our board of directors declared a quarterly common stock dividend of 14 cents per share, payable on February 23rd, to stockholders of record as of February 9th of 2024. Continuing to slide five, at December 31 of 2023, our total deposits were $14.8 billion. Average deposits in the fourth quarter were $15.3 billion, a decrease of less than 3% quarter over quarter. During the fourth quarter, We reduced the brokered time deposits by $450 million, or 25% from September 30th. Quarter over quarter, demand deposits declined, reflecting seasonality in fund flows from commercial customers in the residential mortgage industry. These customers are unrelated to the exit of our residential mortgage warehouse line business. Normally, the seasonal outflow of these funds in the fourth quarter reveals in subsequent quarters. Our consumer deposits were stable quarter over quarter and represented 37% of total deposits at year end 2023. Year over year, our consumer deposits are up 5%, which is notable given the disruption in the banking industry in the first half of 2023. This reflects the strength of our deposit franchise in the communities that we serve. Our gross loan-to-deposit ratio was 94% at December 31 of 23. We are targeting operating at a loan-to-deposit ratio below 95%. Moving on to slide six. At December 31 of 2023, our loan portfolio totaled $13.9 billion. a decrease of 3% quarter over quarter. Average loans for the 2023 fourth quarter totaled $14.1 billion, down 3% linked quarter. During the quarter, we completed the exit of our residential mortgage warehouse line business, which accounted for $65 million of the decline in loan balances. Looking ahead at 2024, following our strategic reorganization, Our front line is pivoting and gearing up for growth. Accordingly, we expect to see positive loan growth this year. On slides seven and nine, I'm sorry, seven and eight, we provide more details on our commercial real estate loans, which are well diversified by property type and are granular in size. The loan-to values remain low across the portfolio with a weighted average of approximately 45% at December 31 of 2023. The vast majority of our commercial real estate loans have full recourse with personal guarantees. Asset quality remains strong with 99% of the commercial real estate portfolio being past graded at year-end 2023 and with no signs of any systemic risks. With that, I will ask Juliana to provide additional details on our financial performance for the fourth quarter. Juliana?