Q2 2025 Hope Bancorp Inc Earnings Call
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Operator: Please note this event is being recorded.
Angie Yang: I would now like to turn the conference over to Director of Investor Relations Thank you, Drew. Good morning, everyone. And thank you for joining us for the Hope Bancorp 2025 second quarter investor conference call. As usual, we will be using a slide presentation to accompany our discussion this morning, which is available in the presentations page of our investor relations website.
Good day and welcome to the Hope Bank Corp, 2025 second quarter earnings conference call. All participants will be in listen-only mode. Should you need assistance? Please signal a conference specialist. By pressing star, then zero on your telephone keypad. 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 director of investor relations. Please go ahead.
Angie Yang: 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. 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.
Thank you drew, good morning, everyone. And thank you for joining us for the Hope Bank Corp, 2025 second quarter investor conference call. As usual we will be using a slide presentation to accompany our discussion this morning, which is available in the presentations page of our investor relations website.
Beginning on slide 2. 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.
Angie Yang: In addition, some of the information referenced on this call today are non-GAAP financial measures. For a more detailed description of the risk factors and a reconciliation of GAAP to non-GAAP financial measures, please refer to the company's filings with the SEC as well as the safe harbor statements in our press release issued this morning.
Forward-looking statements are not guarantees of future performance actual outcomes and results May differ materially hoping Corp assumes, no, obligation to revise, any forward-looking projections that may be made on today's call.
Operator: Now we have allotted one hour for this call.
Angie Yang: Presenting from the management side today will be Kevin Kim, Hope Bancorp's Chairman, President and CEO, and 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.
Speaker Change: In addition, some of the information referenced on this call today are non-gaap Financial measures for more detailed description of the risk factors and a Reconciliation of gaap to non-gaap financial measures. Please refer to the company's filings with the SEC, as well as the Safe Harbor statements in our press release issued this morning. Now we have a lot in 1 hour for this call presenting from the management side. Today will be Kevin Kim, hoping courts, chairman president, and CEO and Juliana belissa our Chief Financial Officer, Peter Coe, our chief operating officer is also.
Kevin Kim: With that, let me turn the call over to Kevin Kim. Kevin?
Kevin Kim: Thank you, Angie.
Speaker Change: 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
Kevin Kim: Good morning, everyone. And thank you for joining us today. Let's begin on slide three with a brief overview of the quarter. The second quarter of 2025 was a milestone quarter for Hope Bancorp, as we completed the acquisition of Territorial Bancorp, entering the strategically important market of Hawaii. We are excited about the opportunities that this presents. We also repositioned a portion of our legacy securities portfolio to enhance our interest income. Accordingly, we believe net income excluding notable items is more indicative of our fundamental performance this quarter. Net income for the 2025 second quarter, excluding notable items, totaled $24.5 million, up 7% from $22.9 million, excluding notable items in the preceding first quarter.
Kevin Kim: Thank you, Angie. Good morning, everyone. And thank you for joining us today.
Kevin Kim: Let's begin on, slide 3 with a brief overview of the quarter.
Kevin Kim: The second quarter of 2025 was a milestone quarter for Hope anchor as we completed, the acquisition of territorial Bank warp, and entering the strategically important Market of Hawaii.
Kevin Kim: We are excited about the opportunities that this presents.
Kevin Kim: We also repositioned a portion of our Legacy Securities portfolio to enhance our interest income.
Kevin Kim: Earnings per diluted share, excluding notable items, were 19 cents for both quarters as we issued 9 million shares with the territorial transaction. As a result of the one-time loss incurred from selling lower-yielding legacy securities and from merger-related items, together with a one-time impact from a change in California's state tax apportionment law, we reported a net loss of $27.9 million for the second quarter. Pre-tax, pre-provision net revenue, excluding notable items, grew to $41.2 million in the second quarter of 2025, up 17% from $35.2 million in the 2025 first quarter. This reflected the impact of the territorial acquisition, legacy loan growth, improvement in the cost of deposits, and core fee income growth.
Kevin Kim: Accordingly, we believe. Net income excluding notable items is more indicative of our fundamental performance. This quarter net income for the 2025 second quarter excluding notable items totaled, 24.5 million up 7% from 22.9 million excluding notable items in the preceding first quarter,
Kevin Kim: Earnings per diluted share.
Kevin Kim: Excluding notable items were 19 cents for both quarters. As we issued 9 million shares with the territorial transaction.
Kevin Kim: As a result of the 1-time loss incurred from selling lower yielding Legacy Securities and from Mojo related items together with a 1-time impact from a change. In California's state tax approximate law. We reported a net loss of 27.9 million for the second quarter.
Kevin Kim: Pre-tax, pre-provision, net revenue excluding notable items grew to 41.2 million in the second quarter of 2025.
Kevin Kim: Up, 17% from 35.2 million in the 2025 first quarter.
Kevin Kim: The cost of deposits and core fee. Income growth.
Kevin Kim: Moving on to slide four, all our capital ratios remain well above the requirements for well-capitalized financial institutions after the close of the territorial acquisition. Our strong capital levels and ample liquidity provide us a healthy cushion with which to navigate various macroeconomic scenarios and support prudent balance sheet growth.
Moving on to slide 4.
Kevin Kim: All our Caper, ratios remain. Well, above the requirements for well capitalized, financial institutions after the close of the territorial acquisition.
Kevin Kim: Our board of directors declared a quarterly common stock dividend of 14 cents per share payable on August 15th to stockholders of record as of August 1, 2025. Continuing to slide five, strengthening our deposit franchise remains a key priority. At June 30, 2025, our total deposits, with the completion of the territorial acquisition, grew to $15.9 billion, an increase of 10% from the end of the prior quarter. The addition of territorial low-cost deposits drove a substantial improvement in our cost of deposits. In addition, the ongoing maturity and renewal of CDs to lower rates will contribute to the improvement in the cost of funds.
Kevin Kim: Our strong Capital levels and ample liquidity, provide us a healthy cushion with which to navigate various macroeconomic scenarios and support prudent balance of growth.
Kevin Kim: our board of directors, declared a quarterly common stock dividend of 14 cents per share, payable, on August 15th, to stockholders of record, as of August, 1 2025,
Kevin Kim: continuing to slide 5, strengthening our deposit, franchise remains a key priority,
Kevin Kim: Our average cost of interest-bearing deposits declined 37 basis points, quarter over quarter, and our average cost of total deposits decreased by 22 basis points, quarter over quarter. Similar to past quarters, we continue to reduce our broker deposits exposure, which decreased by $183 million, or 19% quarter over quarter. Overall, the broker deposits ratio declined to 5% of total deposits at June 30, 2025, down from 7% as of March 31, 2025, and 9% as of June 30, 2024. Moving on to slide six. At June 30, 2025, loans receivable of $14.4 billion were up 8% from the end of the prior quarter, reflecting the addition of territorial loan portfolio, as well as strengthening organic loan production.
Kevin Kim: At June 30th 2025, our total deposits. With the completion of the territorial acquisition grew to 15.9 billion and increase of 10%. From the end of the prior quarter. The addition of territorials low-cost deposits, drove a substantial improvement in our cost of deposits. In addition, the ongoing maturity and renewal of cities to lower rates, will contribute to the Improvement in the cost of funds.
Kevin Kim: Our average cost of interest bearing deposits declined, 37 basis points quarter of a quarter and our average cost of total deposits decreased by 22 basis points quarter of a quarter.
Kevin Kim: Similar to pass quarters. We continue to reduce our broker deposit exposure, which decreased by 183 million or 19% quarter of a quarter.
Kevin Kim: Overall, the broker deposits ratio declined to 5% of total deposits at June 30th 2025 down from 7% as of March, 3120, 2025, and 9% as of June 30th 2024.
Kevin Kim: Organic loan production increased 57% from the first quarter level with a well-diversified mix of originations across all our areas of lending. Stronger production has translated into modest net growth in our legacy portfolio. Similar to past quarters, we saw robust net growth from Bank of Hope's residential mortgage In addition, commercial real estate loans were up slightly quarter of a quarter. Late in the quarter, we experienced some short-term paydowns in certain commercial lines of credit, and those balances have largely rebuilt immediately after the quarter end. Overall, with the addition of territorial, our loan portfolio diversification has improved notably.
Moving on to slide 6 at June 30th 2025 loans. Receivable of 14.4 billion were up 8% from the end of the prior quarter reflecting. The addition of territorials loan portfolio as well as strengthening strengthening organic Loan Production.
Kevin Kim: Organic Loan Production, increased 57% from the first quarter levels with a well Diversified. Mix of originations across all our areas of Landing.
Kevin Kim: Stronger production has translated into modest. Net growth in our Legacy portfolio, similar to past quarters, we saw robust net growth, from Bank of hopes, the Residential Mortgage team. In addition, commercial real estate loans were up slightly quarter of a quarter late in the quarter, we experienced some short-term pay Downs in certain commercial lines of credit and those balances have largely rebuilt immediately after the quarter end,
Kevin Kim: Residential mortgage and other loans represented 16% of our total loans as of June 30, 2025, up from 9% at March 31, 2025. on slides 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 46% at June 30, 2025, and the profile of our commercial real estate portfolio has not changed meaningfully. Asset quality remains stable.
Kevin Kim: Overall, with the addition of territorial, our loan portfolio diversification has improved notably Residential, Mortgage, and other loans represented 16% of our total loans as of June 30th 2025 up from 9% at March, 31 2025.
Kevin Kim: On slides, 7 and 8.
Julianna Balicka: With that, I will ask Julianna to provide additional details on our financial performance for the second quarter. Thank you, Kevin, and good morning, everyone.
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 46% at June 30th 2025 and the profile of our commercial real estate portfolio has not changed meaningfully as a quality remains stable with that. I will ask Juliana to provide additional details on our financial performance to the second quarter.
Julianna Balicka: Before I begin my remarks, let me just make a quick clarification to an earlier comment. We issued 7 million shares with the territorial Bancorp transaction. And now, beginning on slide nine, our net interest income totaled $118 million for the second quarter of 2025, an increase of 17 percent from the prior quarter. This reflects the positive impact of the territorial acquisition and organic loan growth, as well as an expansion in our net interest margin. On the bottom left quadrant of this slide, you can see the 2025 second quarter pre-tax acquisition accounting adjustments associated with the territorial transaction.
Juliana, thank you. Kevin and good morning everyone. Before I begin my remarks let me just make a quick clarification to an earlier comment. We issued 7 million shares with the territorial Bank, Corp transaction. And now beginning on slide 9, our then interest income, total 118 million for the second quarter of 2025.
Kevin Kim: An increase of 17% from the prior quarter. This reflects the positive impact of the territorial acquisition and organic loan growth as well as an expansion in our net interest margin.
Julianna Balicka: We will continue to recognize such adjustments on a quarterly basis through the amortization periods as noted in the table. Accretion income from territorial loans was $4 million in the second quarter. Accretion income is expected to become a recurring, stable component of our interest income due to the long-dated nature of territorial loans. The amortization period of this portfolio is currently estimated to be 12 years. I will point out that the prepayment rate on this portfolio is slower than what was initially estimated at merger close, in part due to changed forward interest rate curve expectations. For 2025, we are now expecting to recognize approximately $12 million of loan accretion income at approximately $4 million per quarter, compared with $14 million anticipated initially for 2025.
Kevin Kim: Tax acquisition accounting adjustments associated with the territorial transactions.
Kevin Kim: We will continue to recognize such adjustments on a quarterly basis through the amortization periods as noted in the table.
Accretion income from territorial loans was 4 million in the second quarter.
Kevin Kim: Accretion income is expected to become a recurring, stable component of our interesting come due to the long data. Nature of territorial loans. The amortization period of this portfolio is currently estimated to be 12 years.
Kevin Kim: I will point out to the prepayment rate on this portfolio is slower than what was initially estimated at merger. Close in part due to change forward interest rate, curve, expectations,
Julianna Balicka: In June, we sold a portion of our legacy investment securities available for sale with a fair value of $418 million and an aggregate weighted average book yield of 2.33%. The net proceeds from the sale were redeployed to purchase higher yielding securities with an aggregate average market yield of 5.42% at the time of purchase. All else equal, the impact of this repositioning is expected to contribute approximately $12 million per year to interesting companies. Overall, our net interest margin increased by 15 basis points quarter over quarter to 2.69% for the second quarter of 2025. On slide 10, we show you the quarterly trends in our average loan and deposit balances and our weighted average yields and costs.
Kevin Kim: For 2025, we are now expecting to recognize approximately 12 million dollars of loan accretion income at approximately 4 million per quarter, compared with 14 million anticipated in initially for 2025.
In June, we sold a portion of our Legacy investment Securities available for sale. With a fair value of 418 million and an aggregate weighted average spoke yield of 2.33%.
Kevin Kim: The net proceeds from the sale were redeployed to purchase higher yielding Securities. With an aggregate average Market, yield of 5.42% at the time of purchase all else equal, the impact of this repositioning is expected to contribute approximately 12 million per year to interest income.
Kevin Kim: Overall, our net interest margin increased by 15 basis points. Quarter over quarter to 2.69% for the second quarter of 2025.
Julianna Balicka: On to slide 11. Let's look at our non-interest income. Included in non-interest income is a $39 million net loss on the investment securities repositioning that I just discussed, which we consider a notable item. Excluding notable items, the trajectory in our non-interest income has been a highlight over the last year. Second quarter 2025 non-interest income of $15.9 million, excluding the notable loss, was up 44% year-over-year. Service fees on deposit accounts have continued to grow quarter-over-quarter. Swap fee income increased year-over-year by $1 million and year-over-year – excuse me, customer swap fee income increased quarter-over-quarter by $1 million and year-over-year by $1.6 million, reflecting improved customer demand.
Kevin Kim: On site 10, we show you the quarterly Trends in our average loan and deposit balances. And our weighted average yields and costs
Kevin Kim: on to slide 11.
Kevin Kim: Let's look at our non-interest income included. In non-interest income, is a 39 million net loss on the investment, Securities repositioning that I just discussed, which we consider a notable item.
Kevin Kim: Excluding notable items, the trajectory, in our non-interest income has been a highlight over the last year.
Kevin Kim: Second quarter, 2025, non-interest income of 15.9 million, excluding the notable loss was up, 44% year-over-year.
Julianna Balicka: I will also note that first quarter 2025 other income included a favorable valuation mark of $1.7 million related to the sale of non-SBA loans, and this did not recur in the second quarter. In the second quarter, we sold $67 million of SBA loans and recognized net gains on sale of $4 million. This compares with sales of $50 million in the first quarter and $3.1 million of net gains on sale. Some sales that were initially planned for the first quarter moved into the second quarter, so we look at this result on a first-half basis in aggregate.
Kevin Kim: As fees on deposit accounts, have continued to grow quarter, over quarter, swap fee income increased year-over-year by million dollars and year-over-year. Excuse me, customers swap fee income, increased quarter of a quarter by 1 million dollars and year-over-year by 1.6 million reflecting improved customer demand.
Kevin Kim: I will also note that first quarter 2025 other income included a favorable valuation, Mark of 1.7 million related to the sale of non SBA Loans. And this did not recur in the second quarter.
Kevin Kim: In the second quarter, we sold 67 million of SBA Loans and recognized net gains on sale of million dollars. This Compares with sales of fifty million dollars in the first quarter and 3.1 million of net gains on sale.
Julianna Balicka: Moving on to non-interest expense in slide 12. Our non-interest expense totaled $109.5 million in the second quarter, including notable items, which largely comprised one-time merger-related costs. Including notable items, non-interest expense was $92 million in the 2025 second quarter, which compared with $81 million in the first quarter, also excluding notable items. The quarter-over-quarter increase generally reflected the addition of the territorial operations to our organization. Our efficiency ratio, excluding notable items, improved quarter over quarter to 69.1%, compared with 69.8% for the first quarter of 2025.
Kevin Kim: Some sales that were initially planned for the first quarter moved into the second quarter. So we look at this result on a first half basis in aggregate.
Kevin Kim: Moving on to non-interest expense and slide 12, our non-interest, expense totaled 109.5 million in the second quarter including notable items which largely comprised 1-time. Merger related costs
Excluding notable items, non-interest expense was 92 million in the 2025 second quarter which compared with 81 million in the first quarter. Also excluding notable items
Kevin Kim: The quarter over quarter increased generally reflected, the addition of the territorial operations to our organization.
Julianna Balicka: I will also mention a notable tax item this quarter.
Kevin Kim: Our efficiency ratio excluding notable items improved quarter over quarter to 69.1% compared with 69.8%, for the first quarter of 2025.
Julianna Balicka: On June 27, 2025, California's state tax apportionment law changed. Consequently, the one-time remeasurement of our deferred tax asset cost us $4.9 million this quarter, which we include in notable items. On an ongoing basis, this tax law change will lower our company's effective tax rate by approximately 1%.
I will also mention a notable tax item, this quarter.
Kevin Kim: On June 27th 2025 California state tax apportionment law changed consequently. The 1-time re-measurement of our deferred tax asset costs us 4.9 million this quarter, which we include a notable items.
Julianna Balicka: Now moving on to slide 13.
On an ongoing basis. This tax law change will lower our company's effective tax rate by approximately 1%.
Julianna Balicka: I will review our asset quality. Our allowance coverage of loans was 1.04% as of June 30, 2025, compared with 1.11% as of March 31. The change in the coverage ratio primarily reflected the addition of the loans acquired from Territorial, which have a lower reserve requirement due to the lower credit risk profile of residential mortgage loans. Criticized loans declined by $34 million, or 8%, quarter over quarter to $415 million on June 30, 2025. Within that, special mention loans decreased by $47 million, or 26%. As a percentage of total loans, our criticized loan ratio was 2.87% at June 30, down from 3.36% at March 31, 2025.
Kevin Kim: Now, moving on to slide 13, I will review our asset quality
Kevin Kim: Our allowance coverage of loans was 1.04% as of June 30th 2025 compared with 1.11% as of March 31st.
Kevin Kim: The change in the coverage ratio, primarily reflected the addition of the loans, acquired from territorial, which have a lower reserve requirement due to the lower credit risk, profile of Residential, Mortgage Loans.
Kevin Kim: Special mention loans, decreased by 47 million or 26%.
Julianna Balicka: Non-performing assets as of June 30 totaled $113 million, representing 61 basis points of total assets, up from 49 basis points of assets as of March 31. This fluctuation is largely driven by one commercial real estate loan, which is well secured by collateral property in a prime location. That charge-off totaled $12 million, or 33 basis points of average loans, for the second quarter on an annualized basis, compared with $8 million, or annualized 25 basis points of average loans in the first quarter.
Kevin Kim: As a percentage of total loans are criticized. Loan ratio is 2.87% at June 30th down from 3.36% at March 31st 2025,
Kevin Kim: Non-performing assets, as of June 30th, total 113 million representing 61 basis, points of total assets up from 49 basis, points of assets, as of March 31st, this fluctuation is largely driven by 1 commercial real estate loan which is well secured by collateral property and apply prime location.
Julianna Balicka: The 2025 second quarter provision for credit losses was $15 million and included merger related provision for credit losses of $4.5 million, comprising $3.9 million of day one provision for territorial loans at acquisition close and $600,000 net write off related to the exit of Hope's credit card portfolio. These items we consider as notable. With the acquisition, Hope is adopting Territorial's white label credit card program. including notable items, the second quarter provision for credit losses of $10.5 million compared with $5 million in the first quarter, reflecting second quarter net charge-offs as well as a quarter-over-quarter increase in the allowance for unfunded loan commitments.
Kevin Kim: That charge offs total 12 million or 33 basis points of average loans. For the second quarter on an annualized basis compared with 8 million dollars or annualized. 25 basis points of average loans in the first quarter.
Kevin Kim: The 2025 second quarter provision for credit losses was 15 million and included merger related provision for credit losses, of 4.5 million comprising, 3.9 million of day 1, provision for territorial loans at acquisition closed and 600,000 net ride-off related to the exit of Hope's credit card portfolio.
Kevin Kim: These items we consider as notable with the acquisition. Hope is adopting, territorials, white label, credit, card program.
Kevin Kim: With that, let me turn the call back to Kevin. Thank you, Julianna. Moving on to the Outlook on slide 14. We continue to expect 2025 loan growth at a high single-digit percentage rate. Drivers in the second half of the year include continued improved frontline productivity, building on trends from the second quarter, as well as the impact of frontline hiring that we are continuing to make. In our outlook, we customarily use the forward interest rate curve, which currently assumes Fed funds target rate cuts in October and December of 2025. A quarter ago, cuts were expected in June, September, and December.
Kevin Kim: Excluding notable items. The second quarter provision for credit losses of 10.5 million compared with 5 million in the first quarter reflecting second quarter, net charge offs as well as a quarter over quarter, increase in the allowance for unfunded loan commitments.
Kevin Kim: with that, let me turn the call back to Kevin
Kevin Kim: Thank you, Giuliana.
Speaker Change: Moving on to the outlook on, slide 14.
Speaker Change: We continue to expect 2025 loan growth at a high single digit percentage rate, drivers in the second half of the Year include continued. Improved Frontline productivity. Building on trans from the second quarter as well as the impact of Frontline hiring that we are continuing to make
Kevin Kim: All else equal, higher for longer interest rates negatively impact our net interest income. Accordingly, in our outlook, we continue to expect net interest income growth in the high single-digit percentage range for 2025. The negative impact of fewer Fed funds rate cuts on our net interest income and the updated slightly lower amount of loan accretion income expected to be recognized in 2025 will be offset by the incremental increase in interest income from the legacy investment portfolio repositioning that we executed in June. We are increasing our year-over-year fee income growth expectations to be in the high 20th percentage range for 2025 based on the year-to-date momentum across various fee business lines.
Speaker Change: In our Outlook, we customarily use the forward interest rate curve, which is currently assumes fed funds. Target rate Cuts in October and December of 2025, a quarter ago, Cuts were expected in June September and December all else. Equal higher for longer interest rates, negatively impact our net interest income.
Accordingly in our Outlook, we continue to expect that interest income growth in the high single digit percentage range for 2025.
Speaker Change: the negative impact of to your fat funds rate cuts on our net interest income and the updated slightly lower amount of loan accretion income expected to be recognized in 2025, will be offset by the incremental, increase in interest income from the Legacy Investment Portfolio repositioning that we executed in June
Kevin Kim: This excludes notable items. Our outlook for non-interest expenses, excluding notable items, is unchanged at low double-digit percentage growth year-over-year. Lastly, we anticipate an effective tax rate of approximately 14% in both the third quarter and the fourth quarter. This reflects the California state tax apportionment law change and the impact and timing of the tax credit investments we are making.
Speaker Change: We are increasing our year-over-year fee. Income growth expectations to be in the high 20s percentage range for 2025 based on the year to date momentum across various free business lines, this excludes notable items.
Speaker Change: our outlook for non-interest expenses, excluding notable items is unchanged at low, double digit percentage growth year-over-year,
Drew: With that, Drew, please open up the call for questions. We will now begin the question and answer session. Thank you.
Speaker Change: We anticipate an effective tax rate of approximately 14% in both the third quarter and the fourth quarter. This reflects, the California state tax portion and law change, and the impact and timing of the tax credit Investments. We are making
Drew: With that Drew, please open up the call for questions.
Operator: Please see the video description for more information. At this time, your question has been addressed.
Operator: to withdraw. and Wes Starr.
Yes, sir. 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 speaker-phone please pick up your handset 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 2 at this time we will pause momentarily to assemble our roster.
Matthew Clark: Matthew Clark with Piper Hey, good morning. On your fee income guide, I think it looks like you're on pace to do roughly... 63 million. Thank you. for the year. Sorry, I'm getting some feedback. $63 million for the year.
Speaker Change: The first question comes from Matthew Clark with Piper Sandler. Please go ahead.
Hey, good morning.
Morning.
Speaker Change: Um, on your on your fee income guide. Um, I think looks like you're on Pace to do, you know, roughly
63 million.
Speaker Change: Uh, for the year. So I'm getting some feedback.
Kevin Kim: I guess I know it sounds like SBA was a little heavy with delay in sales in 2Q, but anything else going on in the second half with NCIncome that we should Yeah, I think for second half fee income, hi Matthew, the SBA basically, it's a question of timing. You take a look at one first quarter and second quarter and average it out, right? But for the second half of the year, things that we can think about that are positive drivers, as we pointed out, customer swap fee income growth has been a real highlight vis-a-vis year ago levels that as a company we've made a concentrated effort towards promoting that product and underwriting CRE loans with a customer swap in place as opposed to the traditional fixed rate loans.
Speaker Change: like SBA was a little heavy with with, uh, delay and, and sales and 2q, but anything else going on in the second half within the income that we should think about,
Speaker Change: yeah, I
Kevin Kim: So that is continuing to drive fee income growth and also as our loan growth momentum continues and production momentum continues to improve, we are looking at positive trends in other loan related fee income, you know, origination fees, unused commitment fees. arrangement fees, the general, that general bucket.
Speaker Change: have fee income. Hi Matthew. Um, the SBA basically, it's a question of timing. Take a look at 1 first quarter and second quarter and averaged it out, right? But for the second half of the year, um, things that we can uh think about that are positive drivers. Um, as we pointed out customer swap fee, income growth has been a real highlight Visa V year ago, uh, levels that as a company. We've made a concentrated effort towards promoting that product and, uh, underwriting CRA loans with a customer swap, um, in place as opposed to the traditional, uh, fixed rate loans. So that is continuing to drive, uh, fee income growth. And uh, also as our um loan, uh growth, uh, momentum continues and production momentum continues to improve. Uh, we are looking at, uh, positive Trends in other loan related, uh, fee income. Uh, being kind of relate, you know, uh, origination fee.
Speaker Change: These and these commitment fees.
Speaker Change: Arrangement fees, the general, um, that General bucket.
Kevin Kim: And then shifting to the margin, I didn't see a spot right in your deck or in the release, but if you had Spot rate on deposits at the end of June and what you're assuming within your outlook in terms of a cumulative beta on deposits. The spot rate at the end of June was 2.93%. And that's down, by the way, quarter to date by midpoint in July as well. So it's continuing to improve.
Speaker Change: Okay. Okay, and then um, shifting to the margin. I didn't see a spot rate in your deck or in the release, but if you had the
Speaker Change: It's about right on deposits at the end of uh, June and what you're assuming, um, within your outlook, in terms of a cumulative beta on deposits.
Speaker Change: Through the cycle.
Speaker Change: Uh, spot rate at the end of um, June was um, 2.93%.
Kevin Kim: In terms of the full beta that we're assuming for the cycle, given the fact that rate cuts have delayed themselves towards October and December, there's not much more beta to be had this year. So there isn't any change to beta expectations vis-a-vis last quarter.
Kevin Kim: But I will share that for the coming cut, when that happens, we're planning on executing betas at a higher pace than we have initial cuts, so 100% or better. and the impact of CD's changes the total deposit beta calculation as you know since that's timing based. Yep, yep. Okay.
Speaker Change: And that's down by the way quarter to date by um, by midpoint in July as well. So it's continuing to improve. Um, and in terms of the full beta that we're continue, we're assuming for the cycle, um, given the fact that rate Cuts have delayed themselves towards October and December. Um, we don't really, there's not much more beta to be had this year. Um, so there there isn't any change to Beta expectations, Visa V, uh, last quarter, but I will share that for the coming cut. When that happens. Uh, we're planning on executing, um, you know, beta's at a higher Pace than we have in initial Cuts, so, 100% or better
Speaker Change: Deposit product obviously. And then the impact of CDs changes, the total deposit data calculation as you know, since that's timing based
Kevin Kim: And then can you just remind us what percent of your Loans are truly floating that, you know, reset. FedCut. You know, territorial now on board.
Speaker Change: Yep. Yep. Okay. And then, can you just remind us? What percent of your?
Loans are are truly floating that, you know, reset with each fed cut, um, you know, with, you know, territorial Mal on board.
Kevin Kim: About 42% of our loans is truly floating. And then, do you have...
Speaker Change: Um, about 42% of our loans is truly floating.
Got it.
Kevin Kim: How much in the way of cost saves do you have left? for Territorial. consider that.
Speaker Change: and then, do you have, um,
Speaker Change: how much in the way of cost saves? Do you have left?
Kevin Kim: In the Territorial franchise, we are very delighted to welcome the Territorial team members into the Bank of Hope family and we have been focusing on strengthening those operations. As you well know, through other M&A, or generally in M&A, the upfront cost saves are executed in the beginning, which generally relate to corporate administrative cost cuts. And as we have said in the past, we plan to focus on maintaining the continuity of the customer experience. So right now, I will say that there is still more integration and cost savings coming in the second half of the year, but as far as the magnitude, we will share that later in the year.
Speaker Change: For territorial. So we can consider that going forward.
Speaker Change: Uh, in the territorial, uh, franchise. We are very delighted to welcome to territorial, uh, team members into the bank of Hope family. And we have been focusing on, um, strengthening, uh, those operations as you well know, uh, through other m&a, uh, or generally in m&a, The Upfront cost saves are executed in the beginning, which generally relate to corporate administrative, um, Cost Cuts. And as we have said, in the past, um, we plan to focus on maintaining that continuity of the customer experience.
Speaker Change: So uh right now um I will say that there is still um more integration and confidence coming in second half of the year. But as far as the magnitude we will share that uh later in the year.
Operator: I'll step back. Again, if you have a question...
Okay, I'll step back. Thank you.
Gary Tenner: This question comes from Gary Tenner. Please go ahead. Thanks, good morning. A couple of my questions were already asked, but with the deal closed, CET1 ratio over 12% and the stock below tangible book, any thoughts here on a buyback as the dust settles on the transaction? Well, Gary, we have been carefully evaluating our capital efficiencies. and the securities repositioning in June was part of our capital deployment strategies and we are continuing to assess additional opportunities. I think I can't say that much. Okay, thanks.
Speaker Change: Thank you. Uh, once again if you have a question, please limit them to 2 and then you can rejoin the queue. The next question comes from Gary tener with the a Davidson. Please go ahead.
Gary Tener: Uh, thanks. Good morning. Um, a couple of my questions were already asked but, uh, with the deal closed, cet1 ratio over 12% and the stock below tangible book. Any, any thoughts? Uh, here, uh, on a buyback, as the dust settles on the transaction.
well uh uh Gary, uh we need to have been carefully, evaluating our Capital efficiencies
Gary Tener: Strategies and uh, we'd ugh.
Uh, continuing to assess additional opportunities. Uh, I think I can say that much.
Gary Tenner: And then just in terms of the conversion...
Gary Tener: okay, thanks and then just in terms of the, uh,
Gary Tenner: Timing for Territorial, when is that going to occur? Conversion, meaning the system conversion? Yes, yes, or system. Yeah, that is expected to be completed by the end of next year. We have tentatively decided to run a territorial system for the time being because their system is very close to the expiration of their contract, and we are very close to that. Okay, so does that just push out the cost savings that you had talked about when the deal was announced? I think it was like 27% or so of Territorial's expenses, that just push that out? Superstructure.
Gary Tener: The uh, conversion timing for territorial. When is that going to uh, occur?
Conversion. Meaning the system conversion or yes, system conversion.
Gary Tener: Yeah, that that is expected to be completed by the end of next year.
Gary Tener: Uh,
We have uh, 10, I believe, uh, decided to uh run uh territorial system for the time being because their system is very close to uh the uh, expiration of their contract. And uh, we are very close to that. So
Gary Tener: Okay. So does that just push out the cost savings that you had talked about when the deal was announced? I think it was like, 27% or so of territorials expenses, that just push that out.
Kevin Kim: Not necessarily. The core costs and the IT costs were not the biggest component of Territorial's cost base.
Gary Tener: Deeper to make sure.
Gary Tener: not necessarily the, um,
Kevin Kim: If you look at Territorial's disclosures and their proxy statements, you will see that the largest component of cost savings from that franchise would come from the form of executive compensation.
Gary Tener: That core costs and it costs were not the biggest component of territorial cost space.
Gary Tener: You look at territorials disclosures and their proxy statements. You will see that the largest component of cost savings from that franchise would come from the form of um executive compensation.
Speaker Change: All right. Thank you.
Kelly Motta: Kelly Motta with Hey, good morning. Thanks for the question.
Kelly Ma: The next question comes from Kelly. Ma with KBW, please go ahead.
Kevin Kim: I was I was hoping to circle back to your frontline hires. help drive the outlook ahead. I'm wondering if you could share a bit more as to what you're doing on that front. I don't have the cadence of their contributions, as I know it can take a bit of time in order for new hires to add.
Kevin Kim: Necro. Yeah, we have been hiring very experienced, talented commercial and corporate bankers over the past several months, and we are continuing to do that. And if you look at our loan production in the second quarter, we have a very meaningful increase from the first quarter, and I think, based upon the pipeline that we have at the beginning of the third quarter, our loan production will continue to increase over the rest of the year. In our payoff trends, our payoff in the second quarter was not as high as it was in the first remain at elevated levels.
Hey, good morning, thanks for the question. Um, I was, I was hoping to Circle back to your expectations for for loan growth, um, on an organic basis. It was relatively modest this quarter, but, um, you mentioned, you're making some, um, Frontline hires to help help Drive. The Outlook ahead. I'm wondering if you could share a bit more as to what you're doing on that front. Um, and kind of the Cadence of that of their contributions, as I know it, um, can take a, a bit of time in order for, um, new hires to, to add to, uh, necross. Thanks.
Kelly Ma: Yeah. Um, we have been hiring, uh, a very experienced talented, uh, commercial and corporate Bankers, uh, over the past several months, and we are continuing to do that. Uh, and uh, if you look at our, The Loan Production, in the second quarter, we have a uh, very meaningful, uh, uh uh increase from the first quarter. And I think uh the the based upon the pipeline that we have at the beginning of the third quarter, uh our Loan Production will continue to increase over the rest of the year, uh, in our payoff.
Kevin Kim: And I think once the payoffs and paydowns have been stabilized and normalized with the added origination volumes that we can expect from these new bankers, I think the loan growth expectation in the third and fourth quarter is pretty doable for us. Got it. That's helpful.
Kelly Ma: Trends. Uh, our payoff in the second quarter was not as high as it was in the first quarter, but still the the payoffs and pay down Trends, uh, remain at elevated levels. And, uh, uh, I think once, uh, this, uh, the payoffs and pay Downs have been stabilized, uh, and normalized, uh, with uh, the added, uh, uh, origination volumes that we can expect from this new Bankers. I think, uh, the the uh the loan growth, uh, expectation in the third and fourth quarter uh is pretty uh doable for us.
Kevin Kim: And then a second one from me on asset quality. You guys called out and released the migration of a CRE credit. It's well secured and in a prime location.
Speaker Change: Got it, that's helpful. Um, and then a, a second 1 from me on um, asset quality, you guys called out and released the migration about a CRA credit. So, um,
Kevin Kim: Just as you think about the overall credit picture and what you're seeing, I'm wondering You know, if there's been any shift in how you're viewing asset quality of the portfolio relative to the past. a quarter ago.
Kevin Kim: Terrace and just could just provide us with a bit more color as to how you're feeling about credit and what you're watching more carefully.
Peter Koh: Sure, this is Peter. Yeah, we're, you know, actively monitoring our portfolio. I think we're feeling cautiously optimistic. I think a lot of the high levels of uncertainty, although they're still around and, you know, we're definitely monitoring the situation, but we do remain cautiously optimistic. I think if you look at our just overall level of potential problem loans, which is really represented by our level of criticized assets, you saw some meaningful decline this quarter. So really, I think, barring any, you know, unexpected volatilities in the macroeconomic environment, we are, you know, we do think that asset quality remains manageable and stable.
Speaker Change: For disclosures it's it's uh well secured and um in in a prime location. Um just as as you think about um the overall credit picture and what you're seeing, I'm wondering um you know if there's been any shift in in how you're viewing as the quality of the portfolio, relative to maybe a quarter or a go and things were more uncertain with tariffs and just um could just provide us with a bit more Colour as to how you're feeling about credit and what you're watching more carefully. Thanks.
Speaker Change: Assets. Um, you you saw some um, some meaningful decline this quarter. So really, I think barring any, you know, unexpected volatilities in the macroeconomic environment. We are, you know, we do think that as the quality uh remains manageable and uh and stable
Peter Koh: Got it.
Operator: I'll step back. Thanks a lot. Thank you.
Speaker Change: Got it. I'll step back. Thanks a lot.
Thank you.
Speaker Change: again, if you have a question, please press star then 1
Kevin Kim: Great morning, everybody. Kevin, could you provide some commentary on the legacy borrowers in Hope Bancorp, the ones that are on the commercial side, more towards the retail aspect of those businesses? How they did in the second quarter, because I think at the beginning of the quarter there might have been a lot of uncertainty around it, but it seems like that uncertainty started to evaporate by the end of the quarter.
The next question comes from, Tim coffee with Janie. Please go ahead.
Speaker Change: Great morning, everybody.
Tim: Um, yeah. Kevin I was wondering could you provide some commentary on the the Legacy borrowers and hope ban Corp? The ones that are on the commercial side? Uh, more towards the retail aspect of of of those businesses, um, how they did in the second quarter. Because I think at the beginning of the quarter, there might have been a lot of uncertainty around it, but it seems like, um, that uncertainty started to evaporate by the end of the quarter.
Peter Koh: Actually, this is Peter. I can probably answer that. You know, I think just the level of uncertainty was much higher, I think, when we first started the quarter in Q2. I think a little bit of that dust is a little bit settling down. There's obviously still a lot of uncertainty. But, you know, actually, I think as we've been monitoring the situation, I think the economy, and particularly the consumer base, has remained fairly resilient. And although there's still, you know, some risk there, and we're definitely being proactive around that, we really haven't seen much impact to our customer base as of yet.
Tim: Um, actually, this is this is Peter. I can I can probably answer that. Um, you know, I think just level of uncertainty was much higher. I think was his first started the quarter in Q2. Um, I think a little bit of that, um, dust is a little bit settling down. Um, there's obviously still a lot of uncertainty but, you know, actually, I think, as we've, we've been monitoring the situation. I think the economy
Peter Koh: All right, great. Thanks a lot for that, Peter. That's great.
And particularly the consumer base has remained, um, fairly resilient and although there's still, you know, some risk there. And we're, we're definitely being proactive around that. Uh, we have really haven't seen much impact to our our customer base, um, as of yet,
Kevin Kim: And looking at the the deposit portfolio, right? I mean, there seems to be a pretty good balance now between commercial and consumer balances.
Kevin Kim: Is that something one you'd like to, you know, continue, maintain that kind of that balance? And also, do you have a target for how much broker deposits you'll need going? Well, as we have stated in the past, our target loan-to-deposit ratio is to be up to 95%. We're obviously at below 91% there, so we do have some growth and excess liquidity at the moment. However, that should give you an idea for how much deposit growth we believe we need on an ongoing basis, because we've also said in the past that on a medium-term basis, we would like to target loan growth in the high single digits, right?
Speaker Change: All right, great. Thanks a lot for that was great. Um, and the Jewel looking at the, uh, the deposit portfolio, right? I mean there seems to be a, a pretty good balance now between commercial and consumer. Um, balances, uh, is that something 1? You'd like to, you know, continue. Um, maintaining that kind of that balance. And also do you have a a a target for how much broker deposits? You'll need going forward?
Kevin Kim: Now, in terms of the customer-based balance, I think we have a pretty great balance right now between consumer and commercial loans. Our broker deposits are down to 5% of total deposits, so this is a pretty good place from which to focus on generating growth and expanding the customer wallet share and adding new relationships. Great.
Speaker Change: Well, I see, we have stated in the past our, uh, Target loan to deposit ratio, um, is to be, um, up to 95%. Um, we're obviously at below 91% there. So we do have some, uh, growth, uh, like an excess liquidity at the moment. Um, however, but that should give you an idea for how much deposit growth. Uh, we believe we need on an ongoing basis because we've also said, in the past, and on a medium-term basis, we would like to Target, um, loan growth in the high single digits right now, in terms of the customer base balance, um, I think we have a pretty great balance right now between consumer and Commercial loans, our uh broker deposits are um down to 5% of total deposits.
Speaker Change: So um, this is a pretty good place from which to focus on generating uh growth and expanding the customer wallet share and adding new relationships.
Operator: Those are my questions. Thank you very much.
Operator: Thank you.
Speaker Change: Great, those are my questions. Thank you very much.
Tim: Thank you, Tim.
Kelly Motta: A follow up from Kelly Mata with KBW. Please go ahead. Hey, thanks for letting me jump back in.
And we have a follow-up from Kelly. Ma with KBW, please go ahead.
Julianna Balicka: Just a quick modeling question for Julianna. Can you remind us how much more one-time costs are yet to be realized? And now with the conversion kicked out a bit, would those occur closer to conversion or is there a cadence to expect for the back half of the year? Thanks. One second.
Hey, thanks for letting me. Jump back in just a, um, quick modeling question, um, for for Juliana can you remind us, uh, how much more 1 time costs are yet to be realized? And now with the conversion kicked out a bit, um, with those occur closer to conversion, or is there a Cadence to expect, you know, for the back half of the year, thanks?
Julianna Balicka: In the back half of the year, there'll be probably a couple million more of one-time costs in the third quarter and then probably a couple million more in the fourth quarter just from various odds and ends, if you will. So that's what I can share with you right now. Got it. That's helpful. Thank you.
Tim: uh, 1 second um, in the back half of the year, um, they'll be probably a couple million uh, more of um, 1 time costs in the third quarter, and then um, probably a couple million more in the fourth quarter, just from various odds and ends, if you will
Tim: um,
Tim: So, that's what I can share with you right now.
Got it. That's helpful. Thank you.
Matthew Clark: This is a follow-up from Gary. Thanks, I just wanted to ask, I apologize if I missed this, but in terms of the new production in the quarter, what was the average yield on new production? The average yield on the new production was approximately 676%.
Speaker Change: And we have a follow-up from Gary tener from da Davidson. Please go ahead.
Uh, thanks. I just wanted to ask, I apologize if if I missed this but in terms of the new production in the quarter, what was the the average yield on new production?
Speaker Change: um, the average yield in
Speaker Change: Uh, approximately 676%.
Speaker Change: Right. Thank you.
Matthew Clark: This is a follow-up from Matthew Clark.
Speaker Change: And we have a follow-up from Matthew Clark from Piper Sandler, please go ahead.
Julianna Balicka: That's just another housekeeping item for next year. The tax rate, I know it's going to come down by 100 basis points, but does that imply 24%? No, I think that the tax rate for this year, on the full year basis at the 21%, when you look at 2026, I think our kind of tax year kind of going forward beyond this year will be, you know, in that 20%.
Speaker Change: For for next year. Um,
Speaker Change: Um the tax rate. Um, I know it's going to come down by 100 basis points but uh is it does that imply 24% for next year?
Julianna Balicka: Okay, again, not taking into account any tax law changes that may impact 2026 from the passage of recent federal legislation. Okay, so just based on what is in place today, I would say that our tax year kind of going, tax rate going forward will be kind of in that 20, 21% range, and it's down from the prior year because of the state apportionment tax law change, but also because we are continuing to invest in low-income housing and other tax credit investments to help lower our tax burden.
Speaker Change: No, I think that the tax rate for this year um on the full year basis at the 21%. Um, when you look at 2026 um I think our kind of tax year, kind of going forward Beyond this year will be, you know, in that 20 or Senate. Okay, again, not taking into account any tax law changes, that may impact 2026 from the passage of recent Federal legislation, okay? So, just based on what is in place today. I would say that our tax year kind of going tax rate and then going forward will be kind of in that 2021 percent, uh, range and it's down from the prior year, uh, because of the state of forcement tax law change. But also, because we are continuing to invest in uh, low-income housing and other um, tax credit Investments to help lower. Um, our tax burden.
Operator: Great.
Matthew Clark: And then just net charge-offs this quarter up a little bit. Anything chunky in there?
Okay.
Julianna Balicka: unusual to call out. Yeah, and to try to throw up slightly this quarter, I do think that we remain at manageable levels. I mean, we still have some cleanup that we're undergoing right now, so I would just look at sort of just portfolio management as the reason there. But going forward, as you have heard, you know, I think our level of overall problem credits have criticized assets going down, NPL did have a little uptick, but, you know, it's a real estate property that's well-secured. So on the asset quality front, we are, you know, again, cautiously optimistic.
Speaker Change: Great. Um and then just try to charge offs um this quarter up a little bit, anything chunky in there or anything.
Julianna Balicka: I do think there is a roadmap here. The macroeconomic environment continues to support that, you know, we will remain at stable, manageable levels going forward.
Operator: Great.
Speaker Change: Maybe unusual to call out. Just trying to get a sense for, you know, where that might go going forward. I know it's tough to say but yeah, charges were up slightly this quarter. I think that we remain at manageable levels. I mean, we still still have some, uh, clean up that we're, um, undergoing right now. So I would just look at, um, sort of just portfolio management as the reason there. Um, but going forward as you, um, uh have heard, you know, I think our level of overall problem, credits are criticized assets, going down. And PLS did have a little uptick but, uh, you know, it's a real estate property that's well secured. Um, so on the asset quality front, uh, we are, you know, again cautiously optimistic. Uh, I do think there is a a road map here, the macroeconomic environment continues to support, uh, that uh, you know, we will remain uh at stable manageable levels um, going forward.
Operator: Thanks again. Again, if you have a question, please press star, then 1.
Speaker Change: Great. Thanks again.
Kelly Motta: And we have a follow-up from Kelly Motto.
Speaker Change: again, if you have a question, please press star then 1
Speaker Change: And we have a follow-up from Kelly. Ma from KBW, please go ahead.
Julianna Balicka: Thanks for letting me hop in a third time now. Last question for me on the NII guidance. You maintained it, but you also have the benefit of the. structuring in the back half of the year. It seems like some of the guys... related to taking out a rate cut. I'm wondering if you could share if that's really just the function of rates or if there's something else that... is creating that variance, whether it's... additional pressure on the deposit side or slower loan growth, just wondering if you could provide some color as to what drove that.
Thanks. But thanks for letting me uh hop in a third time now. Um, last question for me, on the knee um guidance you maintained it. Um but you also have the benefit of the Securities restructuring in the back half of the year. Um, it seems like some of
Julianna Balicka: Yeah, I can add a couple comments to that.
Speaker Change: The guy changes related to taking out a rate cut um, the accretion from territorial but um on a core core basis is still seems down. Um, wondering if you could share is if that's really just the function of rates or if there's something else that um, is is creating that variance whether it's, you know, maybe some additional pressure on those deposit side or, uh, slower slower, loan, growth, just wondering if you could provide some color as to, what? What? Drove that?
Julianna Balicka: I mean, if you think about it, when we provided the guidance in April, right, we were looking at a rate curve with a first cut starting in June, so that would have given us two full quarters of a rate cut and then a cut in September, which would have given us like a full quarter of another cut, right? And all else equal, as you can see in our, you know, 10Q disclosures, 100 basis points impacts our NII by 20 million. And so, you know, taking out, so, you know, model to model, if we took out the impact of the curve change from our kind of first quarter forecast, that would have taken out about a net $4 million of income.
Yeah, I can add a couple comments to that. I mean, if you think about it, when we provided the guidance in April, right? We were looking at a rate curve, um, with a first cut starting in June. So, that would have been us to full quarters of a rate cut and then a cut in September, which would have given us, like a full quarter of another cut, right? And all of us equal. Um, as you can see in our, um, you know, 10q disclosures 100 basis points, um, impacts our knee by, um, 20 million so, you know, um, taking out. So, you know, model to model. If we took out the impact of the curve change from our kind of first quarter forecast,
Julianna Balicka: So we were able to make that up and offset that with the securities portfolio repositioning, right? And then the change in the forward curve also impacted the pace of recognition of accretion. Higher for longer, all else equal does slow down the prepayment speed. So the upfront accretion in year one for us, we're now looking at 12 million versus 14. So that kind of gets you to the math of maintaining the NII unchanged. And also, you know, we're continuing to improve the pace of originations, but quarter to quarter, the blended loan yield on originations did decrease a little bit.
Julianna Balicka: So continued kind of competitive pricing in the market for loan growth is also, you know, coming through. But basically, the math on it are really, really curve driven and accretion driven.
coming through, but basically the maps on the on it are really, really the curved driven and accretion driven
Julianna Balicka: And then you can ask yourself, what can we do to, you know, kind of change that conversation without just waiting for another rate cut? We've been very proactive in working on our deposit mix and reducing our higher cost deposits, as you saw, the continued improvement from broker deposit exposure, et cetera. That's really, really helpful. Thanks. Thanks again.
Speaker Change: And then you can ask yourself what can we do to, you know, kind of change that conversation without just waiting for another rate cut. Uh we've been very proactive in working on our deposit mix and reducing our higher cost deposits as you saw to continue to improvement from broker deposit exposure Etc.
Operator: I'll step back for good now.
That's really, really helpful. Thanks, thanks again. I'll step back for good now.
Operator: And that concludes our question and answer session. Thank you.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
Operator: Thank you, Drew.
Operator: Once again, thank you all for joining us today, and we look forward to speaking with you in three months. So long, everyone.
Speaker Change: Thank you. Thank you drew. Uh, once again, thank you all for joining us today and uh, we look forward to speaking with you in 3 months.
Operator: The conference has now concluded.
Speaker Change: So long, everyone.
Operator: Thank you for attending today's presentation. You may now disconnect.
Speaker Change: The conference has now concluded, thank you for attending today's presentation. You may now disconnect