Welcome to Hanmi Financial Corporation's second quarter 2024 conference call. As a reminder, today's call is being recorded for replay purposes. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Now, I would like to turn the call over to Ben Brodkowitz, Investor Relations for the company. Please go ahead. Thank you, Joe, and thank you all for joining us today to discuss Hanmi's second quarter 2024 results. This afternoon, Hanmi issued its earnings release and quarterly supplemental slide presentation to accompany today's call. Both documents are available in the IR section of the company's website at hanmi.com. I'm here today with Bonnie Lee, President and Chief Executive Officer of Hanmi Financial Corporation, Anthony Kim, Chief Banking Officer, and Ron Santarosa, Chief Financial Officer. Bonnie will begin today's call with an overview. Anthony will discuss loan and deposit activities. Ron will provide details on our financial performance, and then Bonnie will provide closing comments before we open the call up for your questions. Before we begin, I would like to remind you that today's comments may include forward-looking statements under the federal securities laws. Forward-looking statements are based on current plans, expectations, events, and financial industry trends that may affect the company's future operating results and financial position. Our actual results may differ materially from those contemplated by our forward-looking statements, which involve risks and uncertainties. Discussion of the factors that could cause our actual results to differ materially from these forward-looking statements can be found in our SEC filings, including our reports on Forms 10-K and 10-Q. In particular, we direct you to the discussion of certain risk factors affecting our business contained in our earnings release, our investor presentation, and in our Form 10-Q. With that, I would now like to turn the call over to Bonnie Lee. Bonnie, please go ahead. Thank you, Ben. Good afternoon, everyone. Thank you for joining us today to discuss our second quarter 2024 results. Hanmi delivered solid results in the second quarter, notwithstanding a challenging banking environment. Our team continues to execute our strategy well, always staying true to our core relationship banking model, and we remain focused on diversifying and expanding our loan portfolio and deposit franchise. This two-prong approach enabled us to expand our market share further during the second quarter. Here are some highlights of the second quarter. Net income was $14.5 million, or $0.48 per diluted share. Our return on average assets was 0.77%, and then return on average stockholders' equity was 7.5%. New loan production increased by 17% quarter-over-quarter. Importantly, our asset quality metrics have remained consistently strong. Demand deposits grew 1.4% from the prior quarter and now comprise 31% of total deposits. Noninterest income increased by 4.2% from the first quarter. And finally, noninterest expense declined 3.2%, primarily driven by a decrease in salaries and benefits from seasonally lower employer taxes and capitalized labor costs associated with our investment in a new loan origination system. Looking in more detail at the 17% increase in our new loan production, of a particular note was the 77% increase in SBA loan production, attributable to increased business activity and our investments in talented bankers. Additionally, C&I production increased by 16% on a sequential basis and 62% year-over-year, which contributed to a 3.6% increase in C&I portfolio. While loan production was strong, loans were flat compared to the first quarter due to a higher level of payouts and the continued sales of residential mortgage loans. Deposits were relatively stable. On an encouraging note, we grew demand deposit accounts by 5.6% on an annualized basis, and we are seeing margin stabilization. During the second quarter, we grew non-interest income and employed rigorous expense management. Turning to asset quality, we continued to exercise stringent credit management during the quarter. As a result, our asset quality remains excellent, with the criticized loans declining by over 17% compared to the first quarter. Additionally, net charge-offs continued to be low at 12 basis points of average loans annualized. For the second consecutive quarter, we sold residential mortgage loans into the secondary market. We also sold SBA loans during the quarter, and both actions supplemented our non-interest income. We anticipate capitalizing on opportunity to sell more residential mortgage loans contingent on market conditions. This will further diversify our revenue base and enhance our balance sheet. I'm also pleased to report that our strategic growth initiatives are bearing fruit. Our Corporate Korea initiative continues to perform well and in line with our expectations, with an increasing number of customer referrals. This serves as a strong sign of confidence in our team's capabilities. In the second quarter, Corporate Korea production was slightly higher than the first quarter, at $55 million and $58 million in new deposits. Corporate Korea currently represents approximately 14% of our total loans and 14% of our total deposits. Our estimated loan production reached the $55 million, exceeding our quarterly production target of a $40 million-$45 million. Going forward, we expect loan production to be more in line with this quarterly target. During the second quarter, we completed the consolidation of three branch locations, which Bonnie and Ron will discuss later. As a reminder, these actions are an integral part of our strategy to maximize growth and generate cost savings. We will continue to evaluate future opportunities to optimize our branch footprints. Finally, as part of continued investment in people, process, and technology to support our growth, we completed more than a year-long effort to implement a new loan origination system. This new system offers a well-rounded solution, where all of our lending processes now occur under one platform. The new loan origination system is expected to improve efficiency for underwriting and closing commercial loans and enhance the customer experience through loan origination. I'll now turn the call over to Anthony Kim, our Chief Banking Officer, to discuss the second quarter loan production and deposit activity in more detail. Anthony? Thank you, Bonnie. Thank you all for joining us today. I'll begin by providing additional details on our loan production. Second quarter loan production was $274 million, up $40 million or 17% from the first quarter, with a weighted average interest rate of 8.31% compared to 8.02% last quarter. The increase in loan production was primarily due to an increase in commercial real estate, C&I, and SBA, while residential mortgages declined from the first quarter levels. We remain disciplined with our underwriting as we pursue high-quality loans that meet our standards in the current rate environment. CRE production was $88 million, up from $60 million in the first quarter, due to increased volume in California and the Northeast. The high interest rate environment continues to impact the traditional and refinancing activity. We remain pleased with the quality of our CRE portfolio. It has a weighted average loan-to- value ratio of approximately 50% and a weighted average debt service coverage ratio of 2.2 x. SBA loan production increased to $55 million in the second quarter, up from $31 million in the first quarter. This production increase reflects the marketing talent we have added to the team and the growth we are driving with the small businesses across our markets. Production in C&I during the second quarter was $59 million, an increase of $8 million or 16%. The increase was driven by strong demand from the Corporate Korea, which represented $35 million or 59% of total C&I loan production during the quarter. Total commitments for our commercial lines of credit were over $1.2 billion in the second quarter, up 15% on an annualized basis. Outstanding balances grew by 8%, resulting in a utilization rate of 41%, up from 40% last quarter. Residential mortgage loan production was $30 million for the second quarter, down 43% from the previous quarter, due to lower demand for purchase transactions in this higher interest rate environment. Most of our current lending opportunities continue to be in the purchase market, as refinance activity remains subdued. Residential mortgage loans represented over 15% of our total loan portfolio, the same as one year ago. As Bonnie noted, during the first quarter, we sold approximately $20 million of residential mortgages from our portfolio and are currently exploring additional portfolio sales, depending on market conditions. With respect to Corporate Korea, we again saw healthy demand from these customers, who accounted for $55 million of total loan production, which includes approximately $35 million of C&I production. Our efforts to expand and grow these relationships are continuing to bear fruit. US KC loan balances were $865 million, up $30 million or 4% from the first quarter, and represents approximately 14% of our total loan portfolio. Turning to deposits. In the second quarter, deposits were down 0.7% from the previous quarter, although our demand deposit accounts grew 1.4% or 5.6% annualized over the same period. We continue to expand our partnership base with our Corporate Korea clients with a deposit production of $58 million in the quarter. Our team is making a good progress in adding new relationships that we believe can grow over time. At quarter end, Corporate Korea deposits represented 14% of our total deposits and 16% of our demand deposits. The composition of our deposit base remains relatively stable, which reflects the success of our relationship banking model. During the second quarter, our mix of non-interest-bearing demand deposits increased from 30% to 31%. We completed consolidation of 3 branches in May, and this was executed successfully with no discernible impact on deposits. We'll continue to evaluate the branch network to optimize our footprints. And now, I'll hand the call over to Ron Santarosa, our Chief Financial Officer, for more details on our second quarter financial results. Thank you, Anthony. Net interest income for the second quarter was $48.6 million, down 4% from the first quarter. This decline was principally due to an 11 basis point increase in the cost of our interest-bearing deposits. This increase also led to the 9 basis point decline in our net interest margin and was 2.69% on a taxable-equivalent basis for the second quarter. Reviewing our net interest margin as it unfolded for the first half of the year, we saw an uptick in June, which may be an inflection point indicating a directional change in the trend. Looking forward, we see that the amount of time deposit maturities for the third quarter is somewhat low and that the average rate paid for those maturities is not that far from our current rates. In addition, the cost of interest-bearing deposits for July to date is only about 2 basis points higher than our second quarter average. Importantly, the average rate of our new loan production continues to exceed 8%. In summary, recognizing that one month does not make a trend, our net interest margin expanded at the end of the second quarter, hopefully indicating a positive inflection into the third quarter. Turning to non-interest income, revenues were $8.1 million, up 4.2% from the first quarter. For the second consecutive quarter, we had gains from the sale of residential mortgages, and although the gain was $78,000 less than the first quarter, we retained the servicing rights in this transaction, which will further diversify our revenue sources. Gains from the sales of SBA loans for the second quarter increased $200,000 to $1.6 million, as trade premiums increased to 8.54% and income from bank-owned life insurance increased $300,000. Non-interest expenses for the second quarter declined 3.2% to $35.3 million. Here, we saw the effect of seasonally lower employer taxes and benefits, as well as the investment in a new loan origination system that Bonnie mentioned. In addition, as Anthony noted, we completed a branch consolidation at the end of May that resulted in expenses of $300,000 and an addition to Other Real Estate Owned of $700,000. Credit loss expense for the second quarter was $961,000, comprised of a loan loss provision of $1.2 million and a recovery for off-balance sheet items of $287,000. Net loan charge-offs for the second quarter remained low at 12 basis points of average loans annualized, and overall asset quality remained favorable. Turning to equity capital, our negative AOCI increased $1.1 million from an increase in unrealized after-tax losses on our available-for-sale securities portfolio, as well as an increase in unrealized after-tax losses on our cash flow hedges. During the second quarter, the company announced a new 1.5 million share repurchase program, and subsequently, we purchased 170,000 shares at an average price of $16.05. Tangible book value per share at the end of the second quarter was $22.99, and our tangible equity to tangible asset ratio was 9.19%. Hanmi and the bank continue to exceed the minimum regulatory capital requirements, and the bank continues to exceed the minimum ratios for the well-capitalized category. The company's Common Equity Tier 1 capital ratio was 12.11%, and the bank's total capital ratio was 14.51%. With that, I will turn the call back to you, Bonnie. Thank you, Ron. I'd like to thank our team for their ongoing commitment and dedication. I am thankful to our bankers who continue to foster meaningful relationships with our customers and enhance our franchise value. Hanmi is well positioned for sustainable growth. Our balance sheet is robust, as evidenced by our strong capital ratios, solid liquidity, and excellent credit quality. Our loan pipeline is healthy and building, which reinforces our confidence in our ability to achieve low to mid-single-digit loan growth this year. We have a stable base of core deposits and have recently experienced an improved mix shift to DDAs. We are committed to disciplined expense management. And finally, we are expanding our geographic reach with the opening of a branch in the Atlanta metropolitan area later this year. With broader macroeconomic uncertainty persist, our relationship banking model is our foundation. It guides us how we operate and execute our strategy. We remain confident in our ability to drive ongoing growth and enhance our franchise value for all stakeholders. Thank you for your time today, and we'll now open the call for your questions. Operator, please open the line. Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Kelly Motta with KBW. Please proceed. Hey, good evening. Thanks for the question. Maybe s tarting with loan growth. I think you mentioned in your prepared remarks that production was up 17%, but it looks like balances themselves were flat. Wondering if you, you know, have any commentary as to what potentially drove payoffs or paydowns higher? If any of that had to do with working, you know, certain relationships out of the bank. And as you look ahead and putting it all together, what seems like a reasonable expectation for loan growth at this juncture, given your conservatism as well as what you're seeing in your markets? Sure, Kelly. So, I mean, we had a, you know, a better production in the second Q, obviously from the compared to the first Q. But the payoff was higher, you know, than average. So looking at the last four prior four quarters, our payoffs range from average about $85 million, so low of $80 million, high of $120 million. This quarter, it was higher than average, obviously. And two things manifested. We did have some of the payoffs that are coming in, and we always welcome to retain the good quality loans. But some of our competitors offering more aggressive in terms of asset quality, you know, you know, increasing on the cash out balances and, and, you know, offering much lower rates than the market. So unfortunately, we have to let that go. So just looking forward, I think that, you know, you know, assuming that the payoffs are staying within the average of, you know, $80 million-$85 million, with the pipeline that's building up going into the third quarter, we think we can stay on course and expect a, you know, the annual net increase of, you know, low to mid single digit growth. Got it. That's, that's helpful. And then turning to asset quality, understanding that nonperformers are still relatively low, there was a $6 million pickup, partly N PLs and to a lesser extent, OREO. Can you provide any color as to the credits that migrated? Any, you know, things of note there? And, as a second part of that question, it looks like the loan yields didn't really expand much. I'm wondering if there was any interest reversal that may have impacted loan yields in March in this quarter. Thanks. Sure. So, first of all, NPAs are up roughly about $5 million. The main contributor is one commercial loan, which is about $3 million. That was already identified in the prior quarter and was downgraded in the previous quarter. And the property is in a foreclosure process. Due to the sufficient equity in the property, we do not anticipate any loss coming from that particular loan. And then the rest of them are actually a couple of the small loans that are accumulating about $1.5 million. And actually, out of that, one of the loan actually was brought to current at the beginning of July. In terms of the loan yield, loan yields is a little bit flat. I think it's down one basis point compared to the prior quarter. As I said, it's related to actually the payoffs. The payoffs that we had this quarter, it was in a higher higher rate, higher yielded loans compared to the prior quarter that got paid off. So that's why, although the new production yields came in higher, the overall loan yield kind of stayed flat or slightly down. Got it. That's helpful. I'll step back. Thanks so much. Sure. The next question comes from the line of Gary Tenner with D.A. Davidson. Please proceed. Hey, this is Ahmad Hasan on for Gary Tenner. Good afternoon. Good afternoon. I wanted to touch on deposit rates. Is there any visibility on deposit rates peaking here at the end of the quarter? I mean, lower rates in September may make this a moot point, but are you seeing rates top out here? As we indicated, you know, the cost of interest-bearing deposits are only up about two basis points, so it's a very modest, you know, increase, representing a little bit of mix, a little bit of rate. So, you know, we, you know, as we've tried to point out, we, we think we're peaking. But again, you know, we see that between June and July, you know, when we meet again, we'll have more affirming evidence of exactly what's transpired. All right. Sounds good. What was the period-end deposit spot rate? I'm sorry, could you repeat? The deposit spot rate for the period end. For the end of June, the average for June for CDs was 4.81%, and the average for interest-bearing deposits was 4.28%. Thank you. And maybe if I can squeeze one more. Buybacks, even with the positive stock move recently, shares remain below tangible book. Is it reasonable to assume that you guys will continue, buying back stock? So as we've mentioned on previous calls, you know, the board meets quarterly. We review our dividend, we review our other capital actions. You know, clearly, the way the shares were trading before the most recent moves, share repurchases were, let's say, highly attractive. That gap has narrowed considerably here, over the last several weeks. So, I could anticipate that they may continue, but they certainly won't continue at perhaps the same level that you saw over the last four quarters. Thank you. The next question comes from the line of Adam Butler with Piper Sandler. Please proceed. Hey, everyone, this is Adam on for Matthew Clark. Thanks for taking the questions. So in your commentary, you mentioned that the cost of IBD deposits were up two bps linked quarter or in July to date. And as Kelly mentioned, the loan yields stepped down a slight bit, and you guys mentioned that was related to the elevated payoffs at higher yields. And I think you, Ron, you may have also mentioned in your previous remarks that at the end of the quarter, the NIM inflected. So is it fair to assume that those loan yields recovered? And do you guys happen to have the spot NIM in July to help us out a little bit with modeling? Thanks. So working backwards, no, we don't do NIM on a daily basis. With respect to the loan yields, as Bonnie pointed out, it's just a basis point differential, so I would call that flat. But in addition to the payoffs, which had higher average yields than the production that was put in, you also saw a small, and I would underscore, small mix shift in the portfolio. Equipment financing was a little bit less on a percentage basis. Residential moved down just a bit, and CRE picked up. And so you start to see, again, just as a smidge, so I wouldn't make it too much. It's more evident that you see it year-over-year than it is quarter-over-quarter. With respect, again, to the cost of interest-bearing deposits, when, when we met last quarter, you know, I indicated we were on a month-to-date basis, 10 basis points over. We finished out the quarter at 11. So if you think about it, that's only a 1 basis point move over the last two months of the second quarter. Here we are at 2 basis points. I, I just have a sense that, you know, you're probably gonna see the same kind of idea for the third quarter. That's assuming, one, there's no further, market conditions that would cause our competitors to act in ways that may not be conducive to a rate environment that most people expect will decline. And three, or second, I should say, you know, any particular moves, that the Fed might do outside of expectations now for September. So, it seems like we're on the right trajectory for the inflection, but as I pointed out, we really need July, August, and September to affirm that that is, in fact, the trend. Okay. That's, that's some helpful information. I, I appreciate that. And if I look over on slide 19, you guys have some good information on loan maturities and repricing. It looks like over the next year, you have about $130 million or so per quarter in fixed rate loan production maturing or repricing. What yields are coming off the fixed portfolio right now? And, I guess for the maturing portion, do you plan to use that to fund growth or free up some higher cost funding? Thanks. I don't have that particular data point for you, Adam. I will say, and you can see it, I think, better on an earlier slide. Let me kind of go backwards. Yeah, so if you look at slide 10, you can see the maturities over a 12-month period, but it's granular relative to the loan class. And as you can see, it's the C&I is a category, fairly larger piece, because that those are typically term credits, you know, that are, you know, 1 to 3 lines, which are typically 1. And so the renewal element, particularly on the line, let's say, is perhaps a bit more certain, if I could use that phrase. And then you go into the roll down of the commercial property loans, you know, the largest one being hospitality, you know, followed by, you know, perhaps office and retail. And so those, you know, have a tendency, as Bonnie mentioned, I think, or as Anthony mentioned, either one, that we're kind of selective in how we will look at that renewal. Either from a credit perspective, where we may feel it's not quite what we need for the portfolio, or from a competition perspective, where there'll be another lending institution that might offer a much lower rate than we're comfortable with, a cash out that we're comfortable with, or other parts of, you know, financing terms that we just don't feel, you know, would benefit o ur bank in the long term. Okay, helpful. And then just one more from me, and I might be missing some information, but I saw that you guys closed 2 branches in Texas this quarter. Was that just a product of redundancies in the footprint, or is that reflective of, like, a broader initiative? Yeah, you know, that's an, you know, our branch evaluation and optimization of our branches, it's an ongoing effort. So during the second quarter, we closed 3 branches, 1 in California and 2 in Texas. And, you know, not only the consolidation of the branches, but if you remember, we opened 2 new branches last year, 1 in Portland and 1 in Dublin, the emerging markets. And then, as I had mentioned in my prepared remarks, that we plan to open 1 in the later part of this year in the metropolitan Georgia area. So that, that's an ongoing process. Okay, got it. Thank you, though. Thank you for taking my questions. I appreciate it. All right. Thank you. The next question comes from the line of Matthew Erdner with JonesTrading. Please proceed. Hey, guys. Thanks for taking the question. The loan-to-deposit ratio increased quarter-over-quarter, kinda due to that net loan growth there. Is there a ratio that you guys are targeting internally? You know, as this kinda creeps up, should we expect more loan sales going forward to increase the gain on sale revenue? Thank you. So I think, you know, a couple of quarters, I think I shared that ideally, you know, we'll, we'll try to target loan-to-deposit ratio below 95%. But, you know, coming out of the pandemic and whatnot, and then with interest rate environment, we are where we are. So, I mean, we will take in terms of, you know, loan sales, as, as we see it, one, and contributing to the, to the bottom line, and then also managing the balance sheet, we'll continue with the loan sales and the residential portfolio for now. Gotcha. Thank you for that. And then, you guys mentioned retaining the servicing rights earlier. Could you kinda, flesh that out for me? Because I think I missed the second half of that. Sure. So in the first portfolio sale, it was servicing released. In this one, we explored and then executed the idea of servicing retained. And so the point we're trying to make, that as we continue to look at our production and to look at the appetite for these particular loans in the marketplace, we will continue to explore either retained or released. The retained element, again, providing us another revenue source that we think would be beneficial to the enterprise over the longer term. Gotcha. Then, is there kind of an average coupon on the servicing rights or, I guess, on the loans that you guys are selling? We do charge typically 25-30.375 basis points, the servicing. Okay. That's helpful. Thank you, guys. Bye. The next question will come again from the line of Kelly Motta with KBW. Please proceed. Hey, thanks for letting me back on. You know, I was hoping to go a bit more on the core expense run rate. You guys had a nice reduction in part, when you strip out the one-time costs related to branch consolidations, a nice reduction in costs. And you mentioned you do have another branch coming online later this year. Just wondering, as we look ahead, is there any other areas where you're continuing to work out, you know, costs from, or is this a good run rate on which to build as we look ahead to the back half of the year, especially as production and loan growth is expected to rebound a bit? Kelly, for the second quarter, our non-interest expenses were about $35.3 million. When we look out over the balance of the year, that seems to be a pretty good run rate, you know, allowing for some movement on the numbers to the right of the decimal point. But it seems like that's going to be able to hold at that vicinity for the balance of the year. Got it. That is helpful. And then the last question for me. At least as of 1Q, I believe your CRE concentration was above 300%. I know that's lower than it's been historically, but I know you guys are conservative within your niche. Just wondering if that's a consideration at all as you look to fund growth and thoughts about the mix of that. Is that a constraint or do you feel good at that level? So our regulatory CRE concentration ratio, which we typically illustrate in our investor slides, not so much the quarterly slides, that diminished over, I'll say, the past five years or so. And I can't remember the number specifically, but 340 kinda comes to mind. The decline, the more recent decline is a combination of a little bit lower growth in those categories because the other loan classes, such as residential mortgages, EFAs, the other C&I lending, has allowed us to be, as let's say, a more balanced producer, notwithstanding some variations that occur quarter to quarter. In addition, you see it, the general growth in capital, which also then leads to, you know, a decline in that number. So, I think as we stand today, you're likely to see kind of a continued, you know, slow decline in that particular ratio. We don't have a policy or a desire at this point, or any particular directive for that matter, to drive it below 300%. Got it. Thanks for letting me back on. Sure. Thank you. Ladies and gentlemen, there are no further questions at this time. I'd like to hand the call back to management for any closing remarks. Thank you for joining our call today. We appreciate your interest in Hanmi and look forward to sharing our continued progress with you throughout the balance of the 2024. We will be participating in the 25th Annual KBW Community Bank Investor Conference in New York on July 30th and hope to see many of you there. Thank you. This concludes today's conference. You may now disconnect your lines. Enjoy the rest of your day.