Hope Bancorp, Inc.

Good day and welcome to the HOPE Bancorp 2024 first 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 a touch tone 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, Nicholas. Good morning, everyone, and thank you for joining us for the HopeBank Corp 2024 First Quarter Investor Conference Call. As usual, we will be using a slide presentation to accompany our discussion this morning, including an earnings call presentation and a merger agreement presentation. both of which are available in the presentation page of our investor relations website. Beginning on slide two, let me start 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, as well as statements regarding the proposed transaction between Hope Bancorp and Territorial Bancorp, including the expected timeline for completing the transaction, transaction, future financial and operating results, benefits and synergies of the proposed transaction, and other statements about the future expectations, beliefs, goals, plans, and prospects of Hope Bancorp as well as the combined entities. These statements constitute forward-looking statements and are not guarantees of future performance. Actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The closing of the proposed transaction is subject to regulatory approvals, the approval of the shareholders of territorial Bancorp, and other customary closing conditions. If the transaction is consummated, we may not achieve anticipated synergies, cost savings, and other benefits from the transaction as a result of higher than anticipated transaction costs, deposit attrition, operating costs, customer loss, and business disruption following the merger, including difficulties in integrating the two operations. 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, and Juliana Baliska, 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. Kevin?

Thank you, Angie. Good morning, everyone, and thank you for joining us today. Let us begin on slide three with a brief overview of the quarter. For the first quarter of 2024, we earned net income of $25.9 million or 20 cents per diluted share compared with net income of $26.5 million or 22 cents per diluted share for the fourth quarter of 2023. Excluding notable items, our net income was $27.4 million and our earnings per share were 23 cents. Notable items this quarter comprised merger related costs of $1 million, or $752,000 after tax, an incremental FDIC special assessment of $1 million or $721,000 after tax, and the restructuring cost of $143,000 or $103,000 after tax. Last quarter, Net income excluding notable items was $38.3 million, or 32 cents per diluted share. Notable items in the fourth quarter comprised restructuring charges and an FDIC special assessment. Moving on to slide four. This morning, we announced a definitive agreement to acquire Territorial Bank Corp., the parent company of Territorial Savings Bank, a $2.2 billion in assets institution based in the state of Hawaii. This transaction creates the largest U.S. regional bank catering to multi-ethnic customers across the continental United States and the Hawaiian Islands. Founded in 1921, Territorial has been supporting their local communities and providing personal financial services to their customers for over a century. Hope is excited to be partnering with a bank that shares our values, and we intend to preserve and continue to build on Territorial's long and storied legacy. To ensure continuity of service for the customer base and employees, after the close of the transaction, the legacy Territorial franchise will continue to do business under the Territorial Savings Bank brand as a trade name of Bank of Hope. The partnership with Territorial expands our footprint into the attractive Hawaii market, which has a large Asian American and Pacific Islander community. It will contribute a stable, low-cost core deposit base to the combined company. The spot cost of Territorial's total deposits was 1.61% as of December 31, 2023, or 1.2%, excluding public fund deposits. Per forma, Territorial's residential mortgage loans would more than double the size of HOPE's residential mortgage portfolio, greatly enhancing our loan mix diversification. We believe the transaction will strengthen Territorial Savings Bank for the long term and create meaningful opportunities to grow customer and market share by being part of a larger organization with greater resources and an expanded array of banking products and services. The transaction is expected to close by year-end 2024 and is expected to be immediately accretive to earnings after the close at a double-digit percentage growth rate, sustainably strengthening our profitability. On slide five, you can see that we ended the quarter with strong capital. and all our capital ratios expanded from December 31st of 2023. As of March 31st, 2024, our total capital ratio was 14.19%, up 27 basis points from December 31st, and our common equity T01 ratio was 12.47%, up 19 basis points, quarter over quarter, and our tangible common equity ratio was 9.33 percent, up 47 basis points from year-end 2023. 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 May 23rd to stockholders of record as of May 9th, 2024. Continuing to slide six, at March 31st, 2024, our total deposits were $14.8 billion, essentially stable quarter over quarter. Our line of business groups exceeded their customer deposit growth goals for the quarter, offsetting a planned reduction of broker time deposits. As of March 31st, our gross loan to deposit ratio was 93%. Moving on to slide seven, at March 31st of 2024, our loan portfolio totaled $13.7 billion, a decrease of 1%, quarter of a quarter. Commercial and commercial real estate loans decreased, partially offset by growth in SBA and residential mortgage loans. The negative rate of change in our loan balances has decelerated from recent quarters. With our teams regaining momentum following the reorganization, our pipelines are increasing. On slides eight and nine, we provide more details on our commercial real estate loans, which are well diversified by property type and granular in size. The loan to values remain low across the portfolio with a weighted average of approximately 46% at March 31st, 2024. The vast majority of our commercial real estate loans have full recourse with personal guarantees. Asset quality remains strong with 98.2% of the commercial real estate portfolio being passed graded at March 31st, 2024. With that, I will ask Juliana to provide additional details on our financial performance for the first quarter. Juliana?