Good afternoon, and welcome to the BBCN Bancorp Second Quarter 2016 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Angie Yang, Director of IR and Corporate Communications. Please go ahead.

Thank you, William. Good morning everyone, and thank you for joining us for the BBCN 2016 second quarter investor conference call. Before we begin, I'd like to make a brief statement regarding forward-looking remarks. The call today may contain forward-looking projections regarding the future financial performance of the company and future events, including statements regarding the proposed transaction between BBCN Bancorp and Wilshire Bancorp such as the expected timelines for completing the transaction, future financial and operating results, and benefits and synergies of the proposed transaction. These statements constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and are not statements of historical fact. We wish to caution you that such forward-looking statements reflect our expectations based on current expectations, estimates, forecast and projections, and management assumptions about the future performance of BBCN Bancorp and the combined entity with Wilshire Bancorp. These statements are not guarantees of future performance. Actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The closing of the proposed transaction is subject to customary closing conditions. If the transaction is consummated, we may not achieve anticipated synergies, cost savings, and other benefits from the transaction as a result of higher than anticipated transaction costs, deposit attrition, operating costs, customer loss and business disruption following the merger; including difficulties in integrating the two operations. For a more complete list of descriptions of risks and uncertainties, please refer to BBCN’s Form 10-K for the year ended December 31, 2015 and Wilshire’s Form 10-K for the year ended December 31, 2015, as well as other filings made by BBCN and Wilshire with the SEC, including the registration statement on Form S-4 that includes the joint proxy statement/prospectus of BBCN and Wilshire. Now, as usual, we have allotted one hour for this call. Presenting from the management side today will be Kevin Kim, BBCN Bancorp's Chairman and CEO; Kyu Kim, our Chief Operating Officer; and Doug Goddard, our Chief Financial Officer. Kevin Kim and Doug Goddard are participating from San Francisco today. The rest of the management team including Chief Credit Officer, Mark Lee; and Chief Lending Officer, Jason Kim who will participate in the Q&A session are all here in Los Angeles. With that, let me turn the call over to Kevin Kim. Kevin?

Thank you, Angie. Good morning, everyone, and thank you for joining us today. As usual, I’ll begin with some brief comments on the quarter before asking Kyu and Doug to provide more detailed information on the financial results. When they are finished, I will wrap it up with some closing comments before we open up the call for questions. Let's begin. During the second quarter, we continued to execute well in our core banking operations, while also making good progress preparing for our pending merger with Wilshire Bancorp. For the second quarter, we generated $23.4 million in net income or $0.29 per diluted share and this includes $1.5 million in merger related expenses. This compares with net income of $23.6 million or $0.30 per diluted share in the preceding first quarter, including $1.2 million in merger related expenses. In the years ago second quarter, we generated $22.9 million or $0.29 per diluted share with only $26,000 in merger related expenses. Our 2016 second quarter performance reflects consistency, but when you factor in merger related expenses you can better see the actual improving trends of our core operating performance. Our 2016 second quarter performance was driven by improved loan growth, higher non-interest income, and an efficiency ratio that continues to be below 50%. These positive trends offset the pressure we continue to see on our net interest margins, largely due this quarter to the decline in the benefits from purchasing accounting adjustments. Following a seasonably slower season for loan production in the first quarter, we saw a nice improvement during the second quarter with $496 million in new loan originations. This is a record level of production for a second quarter for BBCN. Looking at the first half of the year, we have generated $830 million in loan originations in 2016, which is 17% higher than the first half of 2015. This loan production has translated into 5.3% loan growth during the first half of the year, after payoffs and pay downs which puts us on track to achieve our targeted low double digit organic growth on a standalone basis. We continue to see the impact of our diversification efforts with increasing production from our commercial and consumer lending businesses. During the second quarter, we generated $89 million of commercial loans and $33 million of consumer loans, mostly consisting of residential mortgage loans. With the continued traction in mortgage lending, our consumer portfolio has increased more than 40% since the start of the year. Now, let me turn the call over to Kyu, to provide additional details on our business development efforts in the second quarter. Kyu?

Thank you, Kevin and good morning everyone. As Kevin mentioned, we had $496 million in loan production for the second quarter. To some extent, our second quarter loan production benefited from lending opportunities that where in the pipeline for the first quarter, but didn’t close until the second quarter. Although we saw a pickup in originations during the second quarter, new investment activity in the commercial real estate market continues to be somewhat sluggish. Most of the production in the second quarter came from refinancing with relatively few of the originations related to new purchase of property. The overall CRE portfolio increased by approximately 4% during the second quarter with the growth well balanced across all major property categories. Some of the strongest growth in the quarter came in are smaller CRE portfolios such as mixed use, office, multifamily, and special use properties, which were all up 4% to 5% from the end of the prior quarter. We had a strong C&I loan production during the quarter with $89 million in new outstandings across a broad set of industries. However, our overall C&I portfolio declined by approximately $7 million from the end of the first quarter. The impact of the new C&I loan commitments and fundings was offset by a decline in credit line utilization rates to 49% at June 30 from 50% at the end of the prior quarter. Overall, we now have $1.2 billion in total credit commitments outstanding to commercial customers. We also saw pickup in SBA loan production, particularly in sellable 7(a) loans. We originated $58.7 million in SBA loans during the second quarter. $56.7 million of which were 7(a) loans. This is up from $37.6 million in 7(a) loans produced in the preceding first quarter of 2016. As in the first quarter, we continued to see a preference for variable rate loans with 62% of our total originations being variable rate and only 38% being fixed rate. The average rate on new loan originations remained fairly consistent from quarter-to-quarter declining by just 1 basis point to 4 point [ph] to 8%. Heading into the second half of the year, our loan pipeline continues to support our view that low double digit organic loan growth is achievable on a standalone basis. With the Wilshire Bancorp merger scheduled to be completed on July 29, we now certainly expect our loan growth for the full year will exceed our standalone projection of low double digit growth. At this point, we are not prepared to provide an updated projection on loan growth for the full year, but expect we will do so on our next quarterly call. I will say however that our pipeline on a standalone basis going into the third quarter continues to be robust. With that let me now turn the call over to Doug to go over our financial results in more detail. Doug?

Thank you, Kyu. As usual, I will limit my discussions to just some of the more significant items in the quarter, since we provide quite a bit of detail on our press release. Starting with the income statement, we had a particularly large variance in purchase accounting adjustment this quarter compared with the preceding first quarter. We saw fewer payoffs of large loans and the acquired loan portfolios during the second quarter. Combined with the steady decline in the level of accretable discount remaining in these portfolios, this resulted in a decrease of approximately $1.6 million in the impact of purchase accounting adjustments from the preceding first quarter. While our average loan balance was 3% higher than the prior quarter, the lower yield on loans resulting from the decline in purchase accounting adjustments resulted in a small drop in our net interest income compared with the preceding first quarter. Excluding the impact of purchase accounting adjustments, our core net interest margin declined by 7 basis points to 3.53%. This was driven by a 3 basis points decline in our weighted average yield on loans, a 13 basis point decline at the yield in our investment portfolio and a 1 basis point increase in our cost of deposits. With legacy purchase accounting adjustments continuing to diminish and the competitive pricing we are seeing for both loans and deposits in our markets it is reasonable to project some continued pressure on our net interest margin on both a core and reported basis going forward. Our non-interest income increased by approximately $1.9 million or 22% from the preceding first quarter. The primary driver of the increase was higher income from the gain on sale of SBA loans. We sold $39.6 million in SBA loans during the second quarter, compared to $23.8 million in…

Thank you, Doug. As we announced last week, the shareholders of both BBCN and Wilshire overwhelmingly approved our merger vehicles and we now have all of the required approvals to complete the transaction. We have set a closing date of Friday, July 29 after the close of business. Effective July 30, 2016, we will begin our new journey under the banner of Bank of Hope at the bank level and Hope Bancorp at the Holding Company level. And we are excited about the launch of the Bank of Hope brand, which we believe captures the optimistic positive and entrepreneurial spirit of our roots in the Korean-American community, while also lending itself well to future marketing and business developing efforts in main stream markets. As previously announced, we finalized the senior leadership team for the combined company. Kyu Kim will serve as Senior EVP and Head of Community Banking. Kyu will lead the commercial lending teams and the retail branch network nationwide, while working with Jason Kim, who will serve as EVP and Chief Lending Officer leading the SBA credit card and equipment lease financing business units. Kyu will also work with the leaders of wealth management and business banking units. Mark Lee will serve as Senior EVP and Head of Corporate Banking. Being a super regional banker with $13 billion in assets, we believe we will have the product and service spreads and lending capacity necessary to develop banking relationships with larger corporate clients, and Mark will lead a new unit dedicated to this initiative. Doug Goddard will be our EVP and CFO serving in the same capacity as it does today. Alex Ko, Wilshire’s current CFO will serve as EVP, Chief Financial Strategist and Deputy CFO. Together Doug and Alex will oversee all aspects of our financial management, as…

We will now begin the question and answer session. [Operator Instructions] The first question comes from Chris McGratty from KBW. Please go ahead.

Hi, good morning.

Good morning.

Good morning.

Yeah, thanks for taking my question. Doug, question for you on the pro forma balance sheet, I appreciate the guidance on the organic loan growth, if we are thinking about the investment portfolio in the cash position, can you help us with approximate size of how you are going to manage that going forward, is it a proportion of earning assets that you targeting or a certain level of liquidity that you maybe are looking after?

Well it’s all of the above and the answer I’m going to give you is somewhat premature because we are still working on our joint strategic planning process, but we typically targeted securities at 12% to 15% of the balance sheet.

Of total assets, okay.

Total assets, correct.

Right, and on your margin commentary about the core compression, that's obviously reflective of where rates are today and the flatness of the curve. I'm interested in the securities portfolio that declined in the quarter. Was that just new purchases at lower yields, or was there higher premium amortization that went through the numbers this quarter?

A little of all the above. A little bit of new purchases, low yield, a little bit of higher amortization, it’s also little bit just in terms of mix. That was probably more of a move that I would expect in one quarter normally. Although new purchases are certainly lower today than they were three months ago.

Okay. So the guidance would be lower but not necessarily to the extent that the core margin [indiscernible].

Yes. I mean a more normal move might have been 2 basis points or 3 basis points there.

Okay. And maybe if I could ask one more and I'll step back. On the SBA, I think if I'm looking at the numbers correctly, BBCN sold about $150 million last year, Wilshire was about $100 million. Is that a fair combined starting point for next year, or can you maybe walk me through what may drive higher or lower volumes for that business? Thank you.

Chris, this is Jason. I didn’t catch all the questions, but I think that you meant to question about the origination side of SBA and BBCN, as well as Wilshire Bank, is that correct?

Right, I was looking, Jason, at the amount of loans that were sold. If you look at the quarterlies last year it was about $150 million for you, and I think it was about $100 million for Wilshire. Just wondered if that's an approximate ballpark for next year?

Yes. You are right about the selling side of the BBCN and I am not sure quite sure about the Wilshire, but we are doing a lot of initiative to really to continue to build the origination side, but I think that’s pretty good approach, but again we continue to build in terms of LP opening, as well as continue to hire business development officers, but that is a good start to kind of a guess on the estimate of the origination.

All right. Thank you for taking my questions.

Our next question comes from Matthew Clark with Piper Jaffray. Please go ahead.

Hi, good morning.

Good morning.

Good morning.

Hi, first one just on the recoveries this quarter, just wanted to get a better sense for your expectation for this level of recoveries going forward. Do you feel that there's still a pretty decent pipeline there to help mitigate net charge-offs? Just curious with the 10 basis points this quarter whether or not that's the new normal or not?

Go ahead Mark.

This is Mark. We are currently seeing about $500,000 recovery as a baseline. That’s basically ongoing payment that we are receiving from the borrowers. Anytime there is one-off events we may see that recovery being a little higher, but baseline is about $500,000.

Okay. And then just on reserve coverage, obviously with the upcoming closure of Wilshire that coverage ratio will obviously get distorted without having to set aside anything on the mark-to-market, $3.8 billion of loans coming over. Just wanted to get a sense, though, just thinking about legacy BBCN, how much more - how much lower can we go on the reserve coverage ratio?

Doug?

Yeah. We obviously, we don’t calculate our reserve based on the coverage ratio it’s the result, it’s not the cause. I think we are in a very normal range right now. I tend to look at it more from the provision side. We are getting a little bit of recovery still just from sort of experience each quarter, but we’re also providing enough to cover growth. My long winded way of saying I think the 10 basis points is right there in a very normal range for us.

Okay, and then just in terms of the commercial real estate growth this quarter, wanted to get a better sense for where that growth was coming from by market first?

Market means geography?

Geographically.

It is mostly from Southern California and New York, New Jersey.

Okay. And then when you think about your CRE concentration relative to capital, what is your - what's your threshold or what's your comfort level with taking that ratio up further? Just want to get a sense for the capacity here for growth.

This is Mark again. The CRE concentration is something that we, from credit administration perspective always look set, however at this time we don’t feel that’s a constraint yet, so we are looking at an opportunity as presented. Hope that answers your question?

Okay. And then just last one on M&A, just curious, you know after you start to integrate this acquisition when you might consider getting back into the markets to do deals?

Well our emphasis at this time and our focus is the successful integration with Wilshire. That is our foremost and most important agenda, but with that being said when a right opportunity comes, I think we will be willing and able and ready to look at the opportunities.

Okay, thanks.

Our next question comes from Timothy Coffey from Fig Partners. Please go ahead.

Thank you, good morning everybody.

Good morning.

Good morning Tim.

I had a question about the deposits. You've had good growth last three, four quarters in your non-CD deposits. Is there any specific region or anything that you're doing on the marketing side that's driving that growth?

Non-interest bearing deposits are fluctuating based on our commercial customers, so there was nothing particular that we really can say that it came from, it’s just overall the commercial customers deposit went up and we actually are growing the deposit from our Alabama area with large subsidiary companies, but other than that it’s just a fluctuation quarter-by-quarter.

Okay. And then Kyu, you were talking about some of the items within that other commercial real estate category, which did show good growth this quarter. Could you remind me again what some of the biggest gainers were in that bucket?

Mark has those numbers.

Let me try to jump in on that. We have some pretty decent origination in the industrial warehouse, mixed use, and we have one large office building, about $8 million office transaction. So it’s pretty much mixed bag and there is a question about our CRE concentration, the focus on the CRE concentration is more of a mix now rather than CRE outstanding.

Okay. And then as we get into closing the merger with Wilshire and the rebranding, what are your expectations for the advertising or marketing expenses associated with that rebranding?

We will spend some. We put out some guidance on merger related expenses a while back and nothing that we are planning or doing is causing us to vary from that target very much, so the nice thing is you’ve got budgets for marketing that were both banks prior to the merger. I don’t think the combined marketing will be dramatically different. The going forward marketing will be dramatically different when the budgeted combined marketing the separate banks.

Okay. And then one more follow-up question for you Doug on the M&A, what are you targeting for kind of non-recurring M&A expenses in 3Q as the deal closes?

I can’t pinpoint exactly when the expenses are going to hit. I think we haven’t changed our guidance for the overall expenses. There are a number of expenses, which are tied to the completion date, so the minimum we would expect in the third quarter would be $10 million and I might expect it to be maybe closer to $12 million with the various miscellaneous.

Okay. All right, those are all my questions. Thank you very much.

Thank you.

[Operator Instructions] Our next question comes from Gary Tenner from D.A. Davidson. Please go ahead.

Thanks, good morning.

Good morning.

Good morning Gary.

Doug I have a question for you just again on the expense topic, I know when you announced the deal and you talked about cost savings they were sort of net of the assumed expense ads for going over $10 billion in assets, should we expect the incremental expense increase to hit right away, and then of course the cost saves to accrue over time? Or will the ads also happen over time?

I think the ads will happen on average sooner than the savings. The savings are going to be, start to become material post systems conversion, which we are scheduling for November 30. And obviously on the other side we are not going to ramp up everything we need to do to be in full compliance with DFAS and so forth on day one. Those are projects that are stretching out over two years, but the incremental expenses are starting now and there will be some cost saves right away I would very much focus on 2017, the start of 2017 for the cost saves.

Okay, thanks very much.

[Operator Instructions] The next question comes from Don Worthington from Raymond James. Please go ahead.

Thank you. Good morning, everyone.

Good morning.

Good morning.

In terms of the - maybe just a follow on to Gary's question. You haven't changed the guidance at all, have you, in terms of potential cost saves being in that net $42 million range?

No we have not.

Okay. And then I noticed the FTE count, I guess period end was down about 27 FTEs on a linked quarter basis. Is that due to maybe some temporary staffing that was needed in anticipation of the acquisition, or was there something else going on there?

Some of it is normal fluctuation, some of it is a little bit of cost saves that we’ve talked about already hitting the numbers, I mean there are some institutions where we've got empty positions that we're holding open pending the merger. Other than that it’s pretty much day to day variations and ongoing attempts to be cost conscious.

Okay. Thanks. And then FHLB advances were up about $80 million linked quarter. What was the term of those borrowings?

Oh, there is a memory test for me. I honestly don’t remember and I apologize, I’m away from my desk.

I guess what I was just looking for is whether it was short-term liquidity or whether you did any asset liability restructuring with them?

It was a mix. We periodically laid some out longer three to five year range and there is a piece which is managing the month-to-month and day-to-day cash flows, I think we did some of each in that number and I apologize I don’t have the split up in front of me.

That's good. Thank you. Appreciate it.

Our next question is a follow-up from Chris McGratty with KBW. Please go ahead.

Yes, thanks for the follow up. Doug, just on the expenses, to make sure I understood it correctly, the $42 million, I guess when would you expect the full cost saves like on a quarterly basis to be in the numbers? Is that a 4Q 2017 event so 2018 will be clean, or is that some point in 2018?

Yeah, I think it certainly is, it’s in the second half of 2017. I mean the last catalyst for being fully ramped up will be as we closed the last branch we identify we close and then do the follow-up on that. And that is going to be on a careful and thoughtful basis that goes pretty well into 2017.

Okay. So 2018 in and of itself should be a fairly clean number.

Absolutely, yes.

Okay. Thanks.

This concludes the 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. We look forward to speaking with you next quarter as Bank of Hope. Bye, bye.

Thank you.

The conference has now concluded. Thank you for attending today’s presentation, you may now disconnect.