Q2 2024 Hope Bancorp Inc Earnings Call
Operator: Good day, and welcome to the Hope Bancorp 2024 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 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Angie Yang, the Director of Investor Relations. Please go ahead.
Operator: Good day and welcome to the Hope Bancorp 2024 2nd quarter earnings conference call. All participants will be in listen-only mode. Should you need assistance, please single conference specialist by pressing the star key followed by zero.
Speaker Change: Good day and welcome to the Hope Bancorp 2024 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.
Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note, this event is being recorded.
Operator: This event is being recorded.
Angie Yang: I would now like to turn the conference over to Angie Yang, your director of investor relations.
Speaker Change: I would now like to turn the conference over to Angie Yang, the director of investor relations. Please go ahead.
Angie Yang: Please go ahead. Thank you, Megan.
Angie Yang: Thank you, Megan. Good morning, everyone, and thank you for joining us for the Hope Bancorp 2024 Second Quarter Investor Conference Call. As usual, we will be using a slide presentation to accompany our discussion this morning, which is available on the Presentations page of our IR 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.
Angie Yang: Good morning, everyone, and thank you for joining us for the Hope Bancorp 2024 2nd 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 2, let me start with the 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. The closing of the proposed transaction is subject to regulatory approvals, the approval of the stockholders of Territorial Bancorp and other customary closing conditions.
Angie Yang: Thank you, Megan. Good morning, everyone, and thank you for joining us for the Hope Bancorp 2024 Second Quarter Investor Conference Call. As usual, we will be using a slide presentation.
Speaker Change: to accompany our discussion this morning, which is available in the presentations page of our IR website.
Angie Yang: The closing of the proposed transaction is subject to regulatory approvals, the approval of the stockholders of Territorial Bancorp, and other customary closing conditions. Forward-looking statements are not guarantees of future performance, and actual outcomes and results may differ materially.
Speaker Change: Beginning on slide two, let me start with a brief statement regarding forward-looking remarks.
Speaker Change: 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.
Speaker Change: The closing of the proposed transaction is subject to regulatory approvals, the approval of the stockholders of Territorial Bancorp, and other customary closing conditions.
Angie Yang: Forward-looking statements are not guarantees of future performance; actual outcomes and results may differ materially. Hope Bancorp assumes no obligation to revise any forward-looking projections that may be made on today's call. 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 the GAAP to non-GAAP financial measures.
Speaker Change: forward-looking statements are not guarantees of future performance.
Speaker Change: Actual outcomes and results may differ materially.
Angie Yang: Hope Bancorp assumes no obligation to revise any forward-looking projections that may be made on today's call. 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 the 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.
Speaker Change: Hope Bancorp assumes no obligation to revise any forward-looking projections that may be made on today's call.
Speaker Change: In addition, some of the information referenced on this call today are non-GAAP financial measures.
Speaker Change: for a more detailed description of the risk factors and a reconciliation of the GAAP to non-GAAP financial measures.
Angie Yang: Please refer to the company's filings with the SEC as well as the safe harbor statements in our press release issued this morning.
Speaker Change: please refer to the company's filings with the SEC as well as the safe harbor statements in our press release issued this morning.
Angie Yang: 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; Julianna Bolliska, our Chief Financial Officer; Peter Coe, our Chief Operating Officer, is also here with us as usual and will be available for the Q&A session.
Angie Yang: 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. Julianna Balicka, our Chief Financial Officer, Peter Koh, our Chief Operating Officer, is also here as usual and will be available for the Q&A session. With that, let me turn the call over to Kevin Kim. Thank you.
Speaker Change: 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 .
Speaker Change: Julianna Balicka, 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.
Kevin Kim: With that, let me turn the call over to Kevin Kim.
Kevin Kim: Kevin? Thank you, Angie.
Kevin Kim: 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 second quarter of 2024, we earned net income of 25.3 million dollars, or 21 cents per diluted share. Excluding notable items, our net income was 26.6 million dollars and our earnings per share were 22 cents. Notable items this quarter included merger and restructuring-related costs and a partial reversal of a prior accrual for the FBI special assessment. Our results this quarter reflect continued progress in improving our financial performance following our strategic reorganization late last year.
Kevin Sung Kim: Thank you, Angie. Good morning, everyone, and thank you for joining us today.
Kevin Sung Kim: Let us begin on slide three with a brief overview of the quarter. For the second quarter of 2024, we earned net income of $25.3 million, or $0.21 per diluted share. Excluding notable items, our net income was $26.6 million, and our earnings per share were $0.22.
Kevin Sung Kim: 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.
Kevin Sung Kim: For the second quarter of 2024, we earned net income of $25.3 million or $0.21 per diluted share. Excluding notable items, our net income was $26.6 million and our earnings per share were $0.22.
Kevin Sung Kim: Notable items this quarter included merger and restructuring-related costs and a partial reversal of a prior approval for the FDIC special assessment. Our results this quarter reflect continued progress in improving our financial performance following our strategic reorganization late last year. During the second quarter of 2024, our net interest margin expanded, our operating expenses decreased, and our return on assets improved. We are diligently working on our merger integration planning with Territorial Bancorp and look forward to closing the pending transaction by year-end.
Kevin Sung Kim: Notable items this quarter included merger and restructuring related costs and a partial reversal of a prior accrual for the FDIC special assessment.
Kevin Sung Kim: Our results this quarter reflect continued progress in improving our financial performance following our strategic reorganization late last year.
Kevin Kim: During the second quarter of 2024, our net interest margin expanded, our operating expenses decreased, and our return on assets improved. We are diligently working on our merger integration planning with Territorial Bancorp and look forward to closing the pending transaction by year end. Territorial will contribute stable and low-cost deposits to our franchise, and their loans will move and double hopes residential mortgage portfolio. On slide four, you can see that we ended the quarter with strong capital, and all our capital ratios expanded from March 31, 2024. As of June 30 of 2024, our total capital ratio was 14.42%, and our tangible common equity ratio was 9.72%.
Kevin Sung Kim: During the second quarter of 2024, our net interest margin expanded, our operating expenses decreased, and our return on assets improved.
Kevin Sung Kim: We are diligently working on our merger integration planning with Territorial Bancorp and look forward to closing the pending transaction by year-end.
Kevin Sung Kim: Territorial will contribute stable and low-cost deposits to our franchise, and their loans will more than double Hope's residential mortgage portfolio. On slide four, you can see that we ended the quarter with strong capital, and all our capital ratios expanded from March 31, 2024. As of June 30, 2024, our total capital ratio was 14.42%, and our tangible common equity ratio was 9.72%. Our high capital ratios are a strong base with which to support emerging growth opportunities. Our Board of Directors declared a quarterly common stock dividend of $0.14 per share payable on August 22nd to stockholders of record as of August 8th, 2024. Continuing to slide five.
Kevin Sung Kim: Territorial will contribute stable and low-cost deposits to our franchise, and their loans will more than double Hope's residential mortgage portfolio. On slide four,
Kevin Sung Kim: You can see that we ended the quarter with strong capital and all our capital ratios expanded from March 31, 2024.
Kevin Sung Kim: As of June 30 of 2024, our total capital ratio was 14.42% and our tangible common equity ratio was 9.72%.
Kevin Kim: Our high capillaries are a strong base with which to support emerging growth opportunities.
Kevin Sung Kim: Our high capital ratios are a strong base with which to support emerging growth opportunities.
Kevin Kim: Our Board of Directors declared a quarterly common-stuff dividend of $0.14 per share, payable on August 22nd to stockholders of record as of August 8th, 2024. Continuing to slide five, at June 30, 2024, our total deposits were $14.7 billion, essentially stable quarter of a quarter. Our front line continued to execute well with an increase in our non-intersparing demand deposits and other customer deposits, largely offsetting a planned runoff of broker deposits. Moving on to slide six, at June 30, 2024, our gross loans totaled $13.6 billion, a decrease of $87 million, or less than 1% quarter of a quarter.
Kevin Sung Kim: Our Board of Directors declared a quarterly common stock dividend of $0.14 per share payable on August 22nd to stockholders of record as of August 8th, 2024.
Kevin Sung Kim: At June 30, 2024, our total deposits were $14.7 billion, essentially stable quarter over quarter. Our front line continued to execute well, with an increase in our non-interest-bearing demand deposits and other customer deposits, largely offsetting a planned runoff of broker deposits. Moving on to slide six.
Kevin Sung Kim: At June 30, 2024, our total deposits were $14.7 billion, essentially stable quarter over quarter.
Kevin Sung Kim: Our front line continued to execute well with an increase in our non-interest bearing demand deposits and other customer deposits, largely offsetting a planned runoff of broker deposits.
Kevin Sung Kim: At June 30, 2024, our gross loans totaled $13.6 billion, a decrease of $87 million, or less than 1% quarter over quarter. $30 million of this decrease was from SBA loans sold in the second quarter. Overall, loan production improved this quarter. Residential mortgage growth was, once again, robust, and commercial real estate loans were stable. However, this was offset by elevated payoffs and paydowns within C&I loans. Based on our strengthening pipelines, we are looking forward to positive loan growth in the third quarter. See slides 7 and 8.
Kevin Sung Kim: Moving on to slide 6.
Kevin Sung Kim: At June 30, 2024, our gross loans totaled $13.6 billion.
Kevin Sung Kim: a decrease of $87 million or less than 1% quarter over quarter. $30 million of this decrease was from SBA loans sold in the second quarter.
Kevin Kim: $30 million of this decrease was from SBA loans sold in the second quarter. Overall, loan production improved this quarter. Residential mortgage growth was, once again, robust, and commercial real estate loans were stable. However, this was offset by elevated payoffs and paydowns within CNI loans. Based on our strengthening pipelines, we are looking forward to positive loan growth in the third quarter. On slide seven and eight, 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, with a weighted average of approximately 47% at June 30, 2024, and the profile of our CR portfolio has not changed.
Kevin Sung Kim: Overall loan production improved this quarter. Residential mortgage growth was once again robust and commercial real estate loans were stable.
Kevin Sung Kim: However, this was offset by elevated payoffs and paydowns within C&I loans. Based on our strengthening pipelines, we are looking forward to positive loan growth in the third quarter.
Kevin Sung Kim: 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, with a weighted average of approximately 47% at June 30, 2024, and the profile of our CRE portfolio has not changed. Asset quality is stable, and 98% of the commercial real estate portfolio was past graded as of June 30, 2024. With that in mind, I will ask Julianna to provide additional details on her financial performance for the second quarter. Julianna?
Kevin Sung Kim: on slides 7 and 8.
Kevin Sung Kim: We provide more details on our commercial real estate loans, which are well diversified by property type and granular in size.
Kevin Sung Kim: The loan-to-values remain low, with a weighted average of approximately 47% at June 30, 2024, and the profile of our CRE portfolio has not changed.
Kevin Kim: As a quality is stable, and 98% of the commercial real estate portfolio was passed graded at June 30, 2024.
Kevin Sung Kim: Asset quality is stable and 98% of the commercial real estate portfolio was past graded at June 30, 2024.
Julianna Bolliska: With that, I will ask Juliana to provide additional details on our financial performance for the second quarter.
Kevin Sung Kim: With that, I will ask Julianna to provide additional details on our financial performance for the second quarter.
Julianna Bolliska: Juliana? Thank you, Kevin. Beginning with slide nine, our net interest income totaled $106 million for the second quarter of 2024, a decrease of $9 million from the first quarter. Approximately 4 million of sequential decrease was attributable to the net impact of the payoff of our bank term funding program borrowings in late March and early April, which we paid off in full with interest-earning cash. Quarter over quarter, net interest margin expanded by seven basis points to 2.62%. A notable highlight is the deceleration and the quarterly increase of our cost of deposits. Quarter over quarter, the average cost of total deposits increased by only three basis points.
Julianna Balicka: Kevin, beginning with slide 9, our net interest income totaled $106 million for the second quarter of 2024, a decrease of $9 million from the first quarter. Approximately $4 million of the sequential decrease was attributable to the net impact of the payoff of our bank term funding program borrowings in late March and early April, which we paid off in full with interest-earning cash.
Julianna: Julianna. Thank you, Kevin.
Julianna: Beginning with slide 9.
Julianna: Our net interest income totaled $106 million for the second quarter of 2024, a decrease of $9 million from the first quarter.
Julianna: Approximately $4 million of the sequential decrease was attributable to the net impact of the payoff of our bank term funding program borrowings in late March and early April , which we paid off in full with interest earning cash.
Julianna Balicka: Quarter over quarter, our net interest margin expanded by 7 basis points to 2.62%. A notable highlight is the deceleration in the quarterly increase in our cost of deposits. Order over quarter, our average cost of total deposits increased by only three basis points, the lowest quarterly rates have changed since the first quarter of 2022. On slide 10, we show you the quarterly trends in our average loan and deposit balances and our weighted average costs and yields on Tuesday the 11th.
Julianna: Quarter over quarter, our net interest margin expanded by 7 basis points to 2.62%.
Julianna: A notable highlight is the deceleration in the quarterly increase of our cost of deposits. Quarter over quarter, our average cost of total deposits increased by only three basis points, the lowest quarterly rate of change since the first quarter of 2022.
Julianna Bolliska: The lowest quarterly rate have changed since the first quarter of 2022. On slide 10, we show you the quarterly trends in our average loan and deposit balances and our weighted average cost and yields.
Julianna: On slide 10, we show you the quarterly trends in our average loan and deposit balances and our weighted average costs and yields.
Julianna Bolliska: Onto slide 11. Our non-interesting income was $11 million for the second quarter, an increase of 34% from $8 million in the first quarter. We resume sales of SBA 7(a) loans; a secondary market conditions improved. We sold $30 million this quarter and booked a $2 million net gain on sale. We plan to continue selling SBA loans in the second half of the year.
Julianna Balicka: Our non-interest income was $11 million for the second quarter, an increase of 34% from $8 million in the first quarter. We resumed sales of SBA 7A loans as secondary market conditions improved. We sold $30 million this quarter and booked a $2 million net gain on sale. We plan to continue selling SBA loans in the second half of the year.
Speaker Change: On to slide 11.
Speaker Change: Her non-interest income was $11 million for the second quarter, an increase of 34% from $8 million in the first quarter.
Speaker Change: We resumed sales of SBA 7A loans, as secondary market conditions improved. We sold $30 million this quarter and booked a $2 million net gain on sale. We plan to continue selling SBA loans in the second half of the year.
Julianna Bolliska: Moving on to non-interest expense in slide 12. Our second quarter, 2024, gaped non-interest expense was $81 million compared with $85 million in the first quarter. Excluding notable items, non-interest expense for the second quarter was $79 million, down 4% quarter over quarter and down 9% year over year. The largest component in this salary and employee benefits expense, which was down 7% quarter over quarter and 16% year over year. You can see the positive impact of the restructuring in the year-over-year comparisons.
Julianna Balicka: Moving on to non-interest expenses, slide 12. Our second quarter 2024 GAAP non-interest expense was $81 million, compared with $85 million in the first quarter. Excluding notable items, non-interest expense for the second quarter was $79 million, down 4% quarter over quarter and down 9% year over year. The largest component is salary and employee benefits expense, which was down 7% quarter over quarter and 16% year over year. You can see the positive impact of the restructuring in the year over year comparison. Now, moving on to slide 13.
Speaker Change: Moving on to non-interest expenses, slide 12.
Speaker Change: Our second quarter 2024 GAAP non-interest expense was $81 million compared with $85 million in the first quarter.
Speaker Change: Excluding notable items, non-interest expense for the second quarter was $79 million, down 4% quarter-over-quarter and down 9% year-over-year.
Speaker Change: The largest component is salary and employee benefits expense, which was down 7% quarter over quarter and 16% year over year. You can see the positive impact of the restructuring in the year over year comparisons.
Julianna Bolliska: Now, moving on to slide 13. I will review our asset quality, which continues to remain stable. Non-performing assets at June 30, 2024, were $67 million, down 37% quarter over quarter. The non-performing asset ratio improved to 39 basis points of total assets at June 30, down from 59 basis points as of March 31. That charge offs for the 2024 second quarter were $4.4 million or annualize 13 basis points of average loans, compared with 10 basis points annualized in the first quarter. That charge-off levels continued to be low and manageable. For the second quarter, the provision for credit losses was $1.4 million, compared with $2.6 million last quarter.
Julianna Balicka: I will review our asset quality, which continues to remain stable. Non-performing assets at June 30, 2024 were $67 million, down 37% quarter over quarter. The non-performing asset ratio improved to 39 basis points of total assets at June 30, down from 59 basis points as of March 31. Net charge-offs for the 2024 second quarter were $4.4 million, or an annualized 13 basis points of average loans, compared with 10 basis points annualized in the first quarter. Net charge-off levels continue to be low and manageable.
Speaker Change: Now, moving on to slide 13.
Speaker Change: I will review our asset quality, which continues to remain stable.
Speaker Change: Non-performing assets at June 30, 2024 were $67 million.
Speaker Change: down 37% quarter over quarter.
Speaker Change: The non-performing asset ratio improved to 39 basis points of total assets.
Speaker Change: at June 30th.
Speaker Change: down from 59 basis points as of March 31st.
Speaker Change: Net charge-offs for the 2024 second quarter, or $4.4 million, are annualized 13 basis points of average loans, compared with 10 basis points annualized in the first quarter. Net charge-off levels continue to be low and manageable.
Kevin Sung Kim: For the second quarter, the provision for credit losses was $1.4 million, compared with $2.6 million last quarter. At June 30, 2024, our allowance for credit losses was $156 million, representing 115 basis points of loans receivable. The reserve coverage ratio has been essentially stable, compared with 116 basis points as of March 31, 2024 or 115 basis points as of December 31, 2023. With that, let me turn the call back to Kevin.
Speaker Change: For the second quarter, the provision for credit losses was $1.4 million, compared with $2.6 million last quarter.
Julianna Bolliska: At June 30 of 2024, our allowance for credit losses was $156 million, representing 115 basis points of loans receivable. The reserve coverage ratio has been essentially stable, comparing with 116 basis points as of March 31, 2024, or 115 basis points as of December 31, 2023.
Speaker Change: At June 30, 2024, our allowance for credit losses was $156 million, representing 115 basis points of loans receivable.
Kevin Sung Kim: The reserve coverage ratio has been essentially stable, comparing with 116 basis points as of March 31, 2024, or 115 basis points as of December 31, 2023. With that, let me turn the call back to Kevin.
Kevin Kim: With that, let me turn the call back to Kevin. Thank you, Joanna. Moving on to the outlook on slide 14. In terms of our fourth quarter, 2024 outlook relative to the fourth quarter, 2023 actual results, we have the following updates. Fourth quarter to fourth quarter, our outlook for average loans to grow at a percentage rate in the low single digits remains unchanged. Residential mortgage loan growth continues to be robust. Commercial loan production continues to strengthen, and we expect the pace of paydowns and payoffs to moderate. Accordingly, we are looking forward to positive loan growth in the second half of the year.
Kevin Sung Kim: Thank you, Julianna. Moving on to the Outlook on slide 14, in terms of our fourth quarter 2024 outlook relative to the fourth quarter 2023 actual results, we have the following updates. From fourth quarter to fourth quarter, our outlook for average loans to grow at a percentage rate in the low single digits remains unchanged. Residential mortgage loan growth continues to be robust.
Kevin Sung Kim: Thank you Julianna. Moving on to the Outlook on slide 14.
Kevin Sung Kim: In terms of our fourth quarter 2024 outlook relative to the fourth quarter 2023 actual results, we have the following updates.
Kevin Sung Kim: Fourth quarter to fourth quarter, our outlook for average loans to grow at a percentage rate in the low single digits remains unchanged.
Kevin Sung Kim: Commercial loan production continues to strengthen, and we expect the pace of paydowns and payoffs to moderate. Accordingly, we are looking forward to positive loan growth in the second half of the year. We now expect net interest income for the fourth quarter of 2024 to decline approximately 10% from $126 million in the fourth quarter of 2023. Approximately 3% of this decrease comes from the net impact of the payoff of the bank term funding program, which contributed a positive $4 million to our net interest income in the fourth quarter of 2023.
Kevin Sung Kim: residential mortgage loan growth continues to be robust. Commercial loan production continues to strengthen and we expect the pace of paydowns and payoffs to moderate. Accordingly, we are looking forward to positive loan growth in the second half of the year.
Kevin Kim: We now expect net interest income for the fourth quarter of 2024 to decline approximately 10 percent from $126 million in the fourth quarter of 2023. Approximately 3 percent of this decrease comes from the net impact of the payoff of the Bank Term Funding Program, which contributed a positive $4 million to our net interest income in the fourth quarter of 2023. Relative to our initial budgeting, our net interest income expectations are lower, reflecting the cumulative impact of payoffs and paydowns in the first half of the year. Marketwide, loan spread, compression on new originations, and the year-to-date shift in deposit. We successfully controlled deposit costs in the second quarter, but deposit pricing remains very competitive, as long as the rate's interest rates remain high.
Kevin Sung Kim: We now expect net interest income for the...
Kevin Sung Kim: 4th quarter of 2024 to decline approximately 10% from $126 million in the 4th quarter of 2023.
Kevin Sung Kim: Approximately 3% of this decrease comes from the net impact of the payoff of the bank term funding program, which contributed a positive $4 million to our net interest income in the fourth quarter of 2023.
Kevin Sung Kim: Relative to our initial budgeting, our net interest income expectations are lower, reflecting the cumulative impact of payoffs and paydowns in the first half of the year, market-wide loan spread compression on new originations, and the year-to-date shift in deposit mix.
Kevin Sung Kim: Relative to our initial budgeting, our net interest income expectations are lower, reflecting the cumulative impact of payoffs and paydowns in the first half of the year.
Kevin Sung Kim: market-wide loan spread compression on new originations and the year-to-date shift in deposit mix.
Kevin Sung Kim: We successfully controlled deposit costs in the second quarter, but deposit pricing remains very competitive as long as interest rates remain high. In our outlook, we are factoring in one Fed Fund's target rate cut of 25 basis points in September of 2024. Overall, we expect the second quarter of 2024 to be at or near the trough in terms of net interest income, with quarterly growth by the fourth quarter of 2024, mainly driven by loan growth. In the second quarter, we resumed SBA loan sales, and we expect to continue to sell SBA loans in the second half of the year. We remain very focused on disciplined expense control.
Kevin Sung Kim: We successfully controlled deposit costs in the second quarter, but deposit pricing remains very competitive as long as the interest rates remain high.
Kevin Kim: In our outlook, we are factoring in one Fed funds target rate cut of 25 basis points in September of 2024. Overall, we expect the second quarter of 2024 to be at or near the trough in terms of that interest income, with quarterly growth by the fourth quarter of 2024, mainly driven by loan growth. In the second quarter, we resumed SBA loan sales and expect to continue to sell SBA loans in the second half of the year. We remain very focused on disciplined expense control. We now expect our fourth quarter 2024 operating expenses, excluding notable items, to decrease by more than 7% from $85 million in the fourth quarter of 2023.
Kevin Sung Kim: In our outlook, we are factoring in one Fed Fund's target rate cut of 25 basis points in September of 2024.
Kevin Sung Kim: Overall, we expect the second quarter of 2024 to be at or near the trough in terms of net interest income, with quarterly growth by the fourth quarter of 2024 mainly driven by loan growth.
Kevin Sung Kim: In the second quarter, we resumed SBA loan sales and expect to continue to sell SBA loans in the second half of the year.
Kevin Sung Kim: We now expect our fourth quarter 2020 operating expenses, excluding notable items, to decrease by more than 7% from $85 million in the fourth quarter of 2023. This is an update compared with our prior outlook for an expense decrease of over 5%. Lastly, we continue to assume an essentially stable asset quality backdrop and stable reserve coverage, which was 115 basis points of loans as of June 30, 2024. Overall, as you see on slide 15, we are right on track toward realizing our medium-term financial goals, namely high single-digit loan growth, plus revenue growth over 10%, and an efficiency ratio under 50% leading to a return on assets over 1.2%.
Kevin Sung Kim: We remain very focused on disciplined expense control. We now expect our fourth quarter 2024 operating expenses, excluding notable items, to decrease by more than 7% from $85 million in the fourth quarter of 2023.
Kevin Kim: This is an update compared with our prior outlook for an expense decrease of over 5%. Lastly, we continue to assume an essentially stable SBA and stable reserve coverage, which was 115 basis points of loans as of June 30, 2024. Overall, as you see on slide 15, we have right on track toward realizing our medium-term financial goals, namely high single-digit loan growth, plus revenue growth over 10%, and an efficiency ratio under 50%, leading to a return on assets over 1.2%.
Kevin Sung Kim: This is an update compared with our prior outlook for an expense decrease of over 5%.
Kevin Sung Kim: Lastly, we continue to assume that
Kevin Sung Kim: and essentially stable asset quality backdrop and stable reserve coverage which was 115 basis points of loans as of June 30, 2024.
Kevin Sung Kim: Overall, as you see on slide 15, we are right on track toward realizing our medium-term financial goals, namely, high single-digit loan growth.
Kevin Sung Kim: plus revenue growth over 10 percent and efficiency ratio under 50 percent, leading to a return on assets over 1.2 percent.
Kevin Kim: Following our real organization in the 2023 fourth quarter, 2024 is a building year as we focus on core deposit initiatives, operating efficiencies, and process improvements to support scalable and profitable growth.
Kevin Sung Kim: Following our reorganization in the 2023 fourth quarter, 2024 is a building year as we focus on core deposit initiatives, operating efficiencies, and process improvements to support scalable and profitable growth. We are excited about our pending merger with Territorial Bancorp, whose contribution will accelerate the achievement of our medium-term target. With that, Operator, please open up the call to questions.
Kevin Sung Kim: following our reorganization in the 2023 fourth quarter.
Kevin Sung Kim: 2024 is a building year as we focus on core deposit initiatives.
Kevin Sung Kim: operating efficiencies and process improvements to support scalable and profitable growth. We are excited about our pending merger with Territorial Bancorp, whose contribution will accelerate the achievement of our medium-term targets.
Kevin Kim: We are excited about our pending merger with Territorial Bank Corps, whose contribution will accelerate the achievements of our medium-term targets.
Operator: With that, operator, please open up the call for questions. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you were using a speaker phone, please pick up your hands up before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. Please limit yourself to two questions. And if you have a follow-up question, please press star, then one.
Speaker Change: With that, Operator, please open up the call for questions.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.
Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. Please limit yourself to two questions, and if you have a follow-up question, please press star, then 1. Our first question comes from Matthew Clark with Piper Sandler. Please go ahead.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. Please limit yourself to two questions, and if you have a follow-up question, please press star then 1.
Matthew Clark: Our first question comes from Matthew Clark with Piper Sandler.
Speaker Change: Our first question comes from Matthew Clark with Piper Sandler. Please go ahead.
Matthew Clark: Hey, good morning, everyone. Just the first one on the loan growth outlook, backing into what you need to do to get to low single digits on average for the fourth quarter implies a decent step up in the second half here. Just can you just talk through what's going to drive that growth?
Matthew Timothy Clark: Hey, good morning, everyone. This is the first one on the loan growth outlook. Backing into what you need to do to get to low single digits on average for the fourth quarter implies a decent step up in the second half here. Can you just talk through what's going to drive that growth and what the pipeline looks like at this stage?
Matthew Timothy Clark: Hey, good morning, everyone.
Matthew Timothy Clark: Just the first one on the loan growth outlook.
Matthew Timothy Clark: [inaudible]
Speaker Change: Backing into what you need to do to get to low single digits on average for the fourth quarter implies a decent step up in the second half here.
Speaker Change: Can you just talk through what's going to drive that growth?
Kevin Kim: and what the pipeline looks like at this stage.
Kevin Sung Kim: Well, Matthew, as you may recall, historically, we have been very strong in terms of our new loan origination. Our loan production engine was the main driver for our organic growth at a much faster pace than most of our peers in pre-COVID times.
Kevin Kim: Well, Matthew, as you may remember, excuse me, historically we have been very strong in terms of our new loan originations. Our loan production engine was the main driver for our organic growth at a much faster pace than most of the peers in the pre-COVID times. But when we had industry-wide challenges, such as what we saw in the past two years, most of the issues we had were deposits in the liability side of the balance.
Speaker Change: and what the pipeline looks like at this stage.
Speaker Change: Well Matthew, as you may remember, excuse me, historically we have been very strong in terms of our new loan originations.
Speaker Change: Our lone production engine was the main driver for our organic growth at a much faster pace than most of the peers in the pre-COVID times. But when we had industry-wide challenges such as what we saw in the past two years,
Kevin Sung Kim: But when we had industry-wide challenges such as what we saw in the past two years, most of the issues we had were deposits on the liability side of the balance sheet. But when we had a strategic reorganization in October 23, it was designed to support high-quality loan and deposit growth. Obviously, we wanted to focus more on enhancing our deposit franchise before we strive to achieve meaningful loan growth. Our 2024 second quarter numbers indicate that we began to see the results of our priority on the deposit front, such as a meaningful reduction in broker time deposits, growth in customer deposits, a very nominal quarter-over-quarter increase in our average cost of deposits, expansion of NIEM, and so on.
Speaker Change: Most of the issues we had were deposits in the liability side of the balance sheet.
Kevin Kim: So when we had a strategic reorganization in October of '23, it was designed to support high-quality loan and deposit growth. Obviously, we wanted to focus more on enhancing our deposit franchise before we strive to achieve meaningful loan growth. Our 2024 second quarter numbers indicate that we began to see the results of our priority on deposit front, such as meaningful reduction in broker-time deposits, growth in customer deposits, very nominal, quarter of a quarter increase in our average cost of deposits, expansion of name, and so on. So now we expect our loan balances to grow in the second half of 24, as we focus on high-quality growth in both loans and deposits.
Speaker Change: So when we had a strategic reorganization in October of 23,
Speaker Change: It was designed to support high-quality loan and deposit growth.
Speaker Change: Obviously, we wanted to focus more on enhancing our deposit franchise before we strive to achieve a meaningful loan growth.
Speaker Change: Our 20-24 second quarter numbers indicate
Speaker Change: that we began to see the results of our priority on deposit front.
Speaker Change: such as meaningful reduction in broker time deposits, growth in customer deposits.
Speaker Change: Very nominal quarter-over-quarter increase in our average cost of deposits.
Kevin Sung Kim: So, now we expect our loan balances to grow in the second half of 2024 as we focus on high-quality growth in both loans and deposits. And our pipeline, the loan pipeline, has been nicely building up, actually. And I think our... loan growth, when we have a better deposit environment, will be accelerated, and we feel pretty confident, as we have shown in the past, that our loan production will be the engine for growth in the second half of the year.
Speaker Change: Expansion of NIEM, and so on.
Speaker Change: So, now we expect our loan balances to grow in the second half of 2024 as we focus high-quality growth in both loans and deposits.
Kevin Kim: And our pipeline, loan pipeline, has been nicely building up, actually. And I think our loan growth, when we have a better deposit environment, will be accelerated, and we feel pretty confident, as we had shown in the past, that our loan production will be the engine for the growth in the second half of the year.
Speaker Change: And our pipeline, loan pipeline, has been nicely building up, actually. And I think our...
Speaker Change: Loan growth, when we have a better deposit environment, will be accelerated and we feel pretty confident as we...
Speaker Change: have shown in the past that our loan production will be the engine for the growth in the second half of the year.
Julianna Bolliska: And Matthew, this is Juliana. I could just say a couple more comments. Quarter to date. For example, our commercial loans are up, and when we look at the second quarter, the headwind for us in second quarter has been the elevated pay-offs and pay-downs as opposed to production, leading budget to actuals. And our commercial real estate was able to beat budget. So we feel comfortable when we look out into the second half of the year that the drivers are aligning well.
Julianna Balicka: Matthew, this is Julianna. If I can add just a couple more comments, Quarter to date, for example, our commercial loans are up, and when we look at the second quarter, the issue for us in the second quarter, or the headwind for us in the second quarter, has been the elevated payoffs and paydowns, as opposed to production beating budget to actuals, and our commercial real estate was able to beat budget. We feel comfortable when we look out into the second half of the year, that the drivers are aligning well.
Speaker Change: and Matthew, this is Julianna, if I can
Speaker Change: [inaudible]
Speaker Change: and our commercial real estate was able to beat budget. So we feel comfortable when we look out into the second half of the year that the drivers are aligning well.
Matthew Clark: Okay, great. And then on the loan yields, they were down this quarter. Not sure if that was just due to the SBA loan sales or not, just any commentary there and the related outlook.
Matthew Timothy Clark: Okay, great. And then on the loan yields, they were down this quarter. Not sure if that was just due to the SBA loan sales or not. Any commentary there and the related outlook?
Matthew Timothy Clark: okay great and then on the loan yields they were down this quarter not sure if that was just due to the SBA loan sales or not just any commentary there and in the related outlook
Kevin Kim: It does reflect to the mix of the loans that were being originated, vis-à-vis just kind of what was running off. And in terms of the commercial loans, there has been spread compression this year, in terms of originations, so that does factor into the loan yields.
Julianna Balicka: It does reflect the mix of the loans that were being originated vis-a-vis just kind of what was running off. And in terms of commercial loans, there has been spread compression this year in terms of origination, so that does kind of factor into the loan yields, and plus, of course, you have the accounting-related items, not accounting-related, but non-yield items such as quarterly-over-quarter changes in prepayment fees and or quarterly-over-quarter changes in non-accrual income reversals.
Speaker Change: It does reflect, too, the mix of the loans that were being originated, vis-a-vis the
Speaker Change: Just kind of what was running off
Speaker Change: And in terms of the commercial loans...
Speaker Change: There has been spread compression this year.
Kevin Kim: And plus, of course, you have the counting-related items, not counting-related, but the non-yield items such as quarter-over-quarter changes in prepayment fees and/or quarter-over-quarter changes in non-accrual income reversals. But also, when you look at the origination yields of, say, commercial real estate compared to 2023 or for commercial loans compared to 2023, there has been market-wide spread, and that does factor into the outlook, which is part of the reason why we did lower the NIO outlook in our outlook side.
Speaker Change: in terms of origination, so that does kind of factor into the loan yields. Plus, of course, you have the accounting related items.
Speaker Change: Not accounting really, but the non-yield items such as quarter-over-quarter changes in prepayment fees and or quarter-over-quarter changes in non-accrual income reversals.
Julianna Balicka: But also, when you look at the origination yields of, say, commercial real estate compared to 2023 or for commercial loans compared to 2023, there has been market-wide spread compression, and that does factor into the outlook, which is part of the reason why we did lower the NII Outlook on our Outlook slide.
Speaker Change: But also, when you look at the origination yields of, say, commercial real estate compared to 2023, or for commercial loans compared to 2023, there has been market-wide spread compression.
Speaker Change: And that does factor into the Outlook, which is part of the reason why we did lower the NII Outlook in our Outlook slide.
Gary Tenner: Gary Tenner, on the margin, do you have the average for the month of June and the spot rate on deposits at the end of June? Gary Tenner, I have the spot rate for the end of June, which is at 3.43. Okay.
Matthew Timothy Clark: Got it. And then on the margin, do you have the average for the month of June and the spot rate on deposits at the end of June?
Speaker Change: Got it. And then on the margin, do you have the average for the month of June and the spot rate on deposits at the end of June ?
Julianna Balicka: I have the spot rate for the end of June, which is at 3.43.
Speaker Change: I have the spot rate for the end of June , which is at 3.43.
Gary Tenner: And then on the SBA loan sale. Sorry, 3.43 just to make sure we're going to have the same number: 3.43 spot rate of total deposits. Yep, got it.
Matthew Timothy Clark: And then on the SBA loan sales... 3.43, just to make sure we're talking about the same number, 3.43 spot rate of total deposits. Yep, got it. And then on the SBA loan sale, should we assume a similar amount get sold, you know, in the second half year per quarter? Yeah, I... I believe so.
Speaker Change: Okay.
Speaker Change: And then on the SBA loan sales, 3.43, just to make sure we're talking about the same number, 3.43 spot rate of total deposits.
Kevin Kim: And then on the SBA loan sale, should we assume a similar amount gets sold in the second half here per quarter? Yeah, I believe so. We began to sell the SBA loans in the second quarter. And we are currently selling more loans in the third quarter. And I expect the total loans to be sold in the third quarter will be more than the number that we had in the second quarter.
Speaker Change: Yep, got it. And then on the SBA loan sale, should we assume a similar amount?
Speaker Change: get sold, you know, in the second half year per quarter.
Kevin Sung Kim: I believe so. We began to sell SBA loans in the second quarter, and we are currently selling more loans in the third quarter, and I expect the total number of loans to be sold in the third quarter will be more than the number that we had in the second quarter.
Speaker Change: Yeah, I...
Speaker Change: I believe so. We began to sell the SBA loans in the second quarter.
Speaker Change: And we are currently selling more loans in the third quarter, and I expect...
Speaker Change: The total loans to be sold in the third quarter will be more than the number that we had in the second quarter.
Matthew Clark: Great. Thanks again.
Chris McGrattie: Our next question comes from Chris McGrattie with KBW.
Speaker Change: Great. Thanks again.
Operator: Our next question comes from Chris McGratty with KBW. Please go ahead.
Speaker Change: Our next question comes from Chris McGratty with KBW. Please go ahead.
Kevin Kim: Please go ahead. Oh, great. Kevin, Angela, slide 15, the medium firm targets, which are 26 and beyond. If I look at current profitability, I mean, that's basically a doubling of your ROI. Talk about the expenses. What rate, what rate outlook is incorporated into this medium-term target? It's based on the current forward curve, although for the rate cuts for the rest of this year, as you can see, we're only factoring September, just because things, you know, near term, there's so much variability. But in the longer term, we are factoring in the current forward curve side funds, which eventually settles at 3.75.
Christopher Edward McGratty: Oh, great. Kevin and Julianna, slide 15, the medium-term targets, which are 26 and beyond. If I look at current profitability, I mean, that's basically a doubling of your ROA. You talked about the expenses. What rate outlook is incorporated into this medium-term target?
Speaker Change: Oh, great. Kevin and Julianna, slide 15, the medium-term targets, which are 26 and beyond.
Christopher Edward McGratty: If I look at current profitability, I mean, that's basically a doubling of your ROA. You talked about the expenses. What rate outlook is incorporated into this medium-term target?
Julianna Balicka: It's based on the current forward curve, although for the rate cuts for the rest of this year, as you can see, we're only factoring in September just because things, you know, near term, there's so much variability, but in the longer term, we are factoring in the current forward curve on Fed funds, which eventually settles at 375. But hold on, we'll get you the 2026 and 2027 numbers in a second Go on to the next question.
Speaker Change: It's based on the current forward curve, although for the rate cuts for the rest of this year, as you can see, we're only factoring September .
Speaker Change: [inaudible]
Kevin Kim: But hold on. Get you the 2026 and 27 numbers in a second.
Kevin Kim: Go on to your next question.
Speaker Change: I'll get you the 2026 and 2027 numbers in a second. Go on to your next question.
Christopher Edward McGratty: Okay, great. I guess the follow-up question would be, what betas are you assuming in the down rate for both deposits and for your assets?
Kevin Kim: Okay. Great. I guess the follow-up would be what betas are you assuming in the down rate for both deposits and for your assets? Well, the variable rate assets, floating rate assets, as you know, that is loans. Those are going to have a high beta, because those reprise automatically; just a matter of timing within the month of when the rate cuts happen. And for deposits, we are assuming a lacked beta, a low beta upfront for the first several cuts before we kind of get to a more normalized beta over time. Okay.
Speaker Change: Okay, great. I guess the follow-up would be what what what betas are you assuming in the down rate for both deposits and for your assets?
Julianna Balicka: Well, the variable rate assets, floating rate assets, as you know, that is, loans, those are going to have a high beta because those reprice automatically; it's just a matter of timing within the month of when the rate cuts happen. And for deposits, we are assuming a lagged beta, a low beta up front for the first several cuts before we kind of get to a more normalized beta over time. It's pretty low in the second half.
Speaker Change: Well, the variable rate assets, floating rate assets, as you know, that is loans.
Speaker Change: Those are going to have a high beta because those reprice automatically. It's just a matter of timing within the month of when the rate cuts.
Speaker Change: And for deposits, we are assuming a lagged beta, a low beta up front for the first several cuts before we kind of get to a more normalized beta over time.
Kevin Kim: One thing I will point out. Go ahead. No, no, go ahead, Joseph. One thing I'll point out is in this quarter, we have gone through an exercise of reviewing our deposit pricing and making sure that all the exception pricing and exceptions, you know, are warranted. So, to start to control our deposit costs ahead of rate cuts. And so we're not assuming a high deposit beta upfront, but we are assuming that we will be able to continue to be disciplined in how we approach deposit pricing post our reorganization. That is a change to our practice vis-à-vis before and an improvement.
Speaker Change: Pretty low in the second half.
Christopher Edward McGratty: No, no, go ahead, go ahead, go ahead, go ahead.
Speaker Change: One thing I will point out,
Julianna Balicka: One thing I'll point out is that in this quarter, we have gone through an exercise of reviewing our deposit pricing and making sure that all the exception pricing and exceptions are warranted so as to start to control our deposit costs ahead of rate cuts. And so we're not assuming a high deposit up front, but we are assuming that we will be able to continue to be disciplined in how we approach deposit pricing following our reorganization. That is a change to our practice vis-a-vis before and an improvement.
Jules: Go ahead. No, no. Go for it.
Jules: One thing I'll point out is in this quarter, we have gone through an exercise of reviewing our deposit pricing and making sure that all the exception pricing and exceptions are warranted so to start to control our deposit costs ahead of rate cuts.
Jules: And so we're not assuming a high deposit vator up front, but we are assuming that we will be able to continue to be disciplined in how we approach deposit pricing post our reorganization. That is a change to our practice vis-à-vis before and an improvement.
Kevin Kim: Okay, great.
Christopher Edward McGratty: Okay, great. And then just the last one I had would be just the tax rate. How should we be thinking about the tax rate from here?
Gary Tenner: And then this last one ahead would be just tax rate.
Kevin Kim: How should we be thinking about the tax rate from here? We are assuming 26% for the full year, so that does have a lower tax rate of second half a year based on when certain tax credit investments and their memorizations kind of hit our piano.
Speaker Change: Okay, great. And then just the last one I had would be just tax rate. How should we be thinking about the tax rate from here?
Julianna Balicka: We are assuming 26% for the full year, so that does have a lower tax rate in the second half of the year based on when certain tax credit investments and their amortizations kind of hit our P&L.
Speaker Change: We are assuming 26% for the full year so that does have a lower tax rate in the second half of the year based on when certain tax credit investments and their amortizations kind of hit our P&L.
Gary Tenner: Okay, thank you very much.
Gary Tenner: Again, if you have a question, please press star, then one. Our next question comes from Gary Tenner with DA Davidson. Please go ahead. Thanks, good morning.
Operator: Again, if you have a question, please press star, then 1. Our next question comes from Gary Tenner with DA Davidson. Please go ahead. Thanks. Good morning.
Speaker Change: Again, if you have a question, please press star then 1. Our next question comes from Gary Tenner with D.A. Davidson. Please go ahead.
Gary Peter Tenner: Thanks, good morning. I was hoping you could provide the CD maturity schedule for the back half of the year with the rates that are coming off.
Gary Tenner: Hoping you could provide the CD maturity schedule for the back of the year with the rates that are coming off. That's a second. And let me just answer it back to finish Chris's question for 2026. We've got the terminal Fed funds at the end of 2026 at 425 and 375 is following here in 2027. And the maturity of our CD's, the maturity in the second half of the year with the rates that are coming off are 510, 512 kind of neighborhoods. And the maturity that are coming off in the third quarter, the 1.56 billion, and in the fourth quarter we've got 2.1 billion.
Gary Peter Tenner: Thanks, good morning. Hoping you could provide the CD maturity schedule for the back half of the year with the rates that are coming off.
Julianna Balicka: And let me just answer back to finish Chris's question for 2026. We've got the terminal set funds at the end of 2026 at 425, and 375 the following year in 2027, and the maturity of our CDs maturing in the second half of the year. We've got The rates that are coming off are 5.10, 5.12, kind of neighborhood. And the maturity that is coming off in the third quarter, the one point... $5.6 billion, and in the fourth quarter, we got $2.1 billion. And what's your sense of who's going to the third quarter, what the...
Speaker Change: One second.
Speaker Change: And let me just answer back to finish Chris's question for 2026. We've got the Terminal Fed Funds at the end of 2026 at $425,000 and $375,000 the following year in 2027.
Speaker Change: The rates that are coming off are 5.10, 5.12 kind of neighborhood. And the maturity that are coming off in the third quarter, the one point.
Speaker Change: $5.6 billion and in the fourth quarter we got $2.1 billion.
Kevin Kim: And what's your sensualist going to the third quarter what the renewal rate outlook would be? I think the renewal rate outlook will be hopefully lower than the current ones for the simpler reason that we have recently reduced pricing. Thanks.
Gary Peter Tenner: And what's your sense, at least going into the third quarter, what the renewal rate outlook would be?
Speaker Change: And what's your sense, at least going into the third quarter, what the renewal rate outlook would be?
Speaker Change: I think the renewal rate outlook will be hopefully lower than the current one for the simple reason that we have recently reduced pricing.
Julianna Balicka: for the simple reason that we have recently reduced our prices.
Gary Peter Tenner: Thanks, and then my other questions were mostly answered, but I noticed in your kind of walkthrough of the non-recurring items in the quarter, the tax provision was different on the press release versus the debt. I'm assuming the one in the press release is the correct one, but just hoping you could ... ... ... ... ... I would use the earning
Kevin Kim: And then my other question is we're mostly answering, but on the, I noticed in your kind of walkthrough of the non-recurring items in the quarter, the tax provision was different on the press release versus the deck. I'm assuming them on the press release is the correct one, but just wanting, hoping you could confirm that. I would use the earnings release and the tables as your primary source document. Sounds good.
Speaker Change: Thanks and then my other questions were mostly answered but on the I noticed in your kind of walkthrough of the non-recurring items in the quarter the tax provision was different on the press release versus the DEC
Speaker Change: I'm assuming the one in the press release is the correct one, but just hoping you could confirm that.
Julianna Balicka: I would use the earnings release and the tables as your primary source document.
Speaker Change: I would use the earnings release and the tables as your primary source document.
Operator: Thank you.
Speaker Change: Sounds good. Thank you.
Kevin Kim: Disconclude our question and answer session. I would like to turn the conference back over to management for any closing remarks. Thank you. Once again, thank you all for joining us today, and we look forward to speaking with you again next quarter.
Kevin Sung Kim: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
Kevin Sung Kim: Once again, thank you all for joining us today, and we look forward to speaking with you again next quarter. So long, everyone.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: Once again, thank you all for joining us today and we look forward to speaking with you again next quarter. So long, everyone.
Operator: So long, everyone.
Operator: The conference is now concluded. Thank you for attending today's presentation.
Operator: You may now discuss.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.