Q1 2021 First Hawaiian Inc Earnings Call
Okay.
Okay.
Ladies and gentlemen, and thank you for standing by and welcome to the first Hawaiian Inc. Q1, 2021 earnings Conference call.
And as time, all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time, Inc.
And any one should require assistance during the conference. Please press star zero on your Touchtone telephone.
As a reminder, this conference is being recorded.
Now I'd like to turn the conference over to Mr. Kevin.
Thank you Silvia. Thank you Sylvia and thank you everyone for joining us as we review our financial results for the first quarter of 2021.
With me today are Bob Harrison, Chairman, President and CEO, Robin molecular CFO, and Ralph Mesick Chief risk Officer.
We have prepared a slide presentation that will be referred to and our remarks today. The presentation is available for downloading and viewing on our website at H B Dot com and the Investor Relations section.
During today's call, we will be making forward looking statements. So please refer the slide one for our safe Harbor statement.
We may also discuss certain non-GAAP financial measures the apt.
And next to this presentation contains reconciliations of these non-GAAP financial measurements for the most directly comparable GAAP measurements and now I'll turn the call over to Bob.
Thank you Kevin and good morning, everyone. I appreciate you joining us today, turning to slide two I'll start by giving a quick update on the current situation Hawaiian.
Overall of the state continues to do a good job of controlling the spread of COVID-19.
The number of new daily cases remained steady and the vaccine rollout is going well and there are no issues with hospital capacity.
As of Wednesday, the statewide seven day average of new cases was 80 and the corresponding positivity rate was one 6%.
Also on Wednesday of the CDC reported that Hawaii has the lowest 70 case rate per 100000 residents of all 50 states.
Vaccine rollout continues to go well through Wednesday about 44% of those 18 years and older had received at least one dose and 32% of been fully vaccinated.
We're also seeing signs of recovery and the visitor industry with the average daily visitor arrivals and steadily increasing since the start of the year.
Also this week the state of announced that effective May 11, and inter island travelers, who have been vaccinated and Hawaii and have completed the required for a 14 day waiting period will be exempt from pre or post traveled testing and quarantine requirements.
While it's not a full of vaccine passport and certainly to step and the right direction.
And the state of seasonally adjusted unemployment rate remained high at 9% March we're hopeful that as bidder visitor arrivals continue to increase and the local economy continues to reopen the unemployment rate will improve.
Housing market remains very strong and the first quarter of median single family home price on Oahu.
Was 915000 up 17% over the prior year and the media and condo price was 455000 up five 8% from the prior year.
Also pleased to report the last month, we published our third annual ESG report.
And this year's update we have adopted the FASB reporting framework and.
And our report is available for download of our Investor Relations website.
Turning to slide three I'll briefly go over our first quarter results.
While the outlook for the local economy is getting brighter the first quarter remained challenging.
Growth in loans was driven by of PPP loans, because we originated $459 of new PPP loans.
Deposits grew by $906 million, driven by growth and consumer and commercial deposits.
The credit quality remained excellent.
Our credit metrics have continued to improve and over 96% of borrowers for went on deferral have returned to pay.
Diluted EPS was <unk> 44.
And the board maintained the dividend of 26 per share.
And finally, we completed several significant customer facing technology projects and Q1 <unk>.
Lighted by a completely redesigned website <unk> dot com.
At the end of the presentation I'll make a few comments on our digital strategy and.
And I'll turn it over to Robert to go over and the financials.
Thank you Bob turning to slide for period end loans and leases were $13 3 billion.
Unchanged versus the prior quarter.
PPP loan balances grew by $358 million and.
We originated over 3600 loans for $459 million.
In Q1, we shifted resources from processing forgiveness applications to originating new PPP loans.
As a result, the number of loans forgiven and the first quarter was less than expected.
Mortgage loan balances were up slightly.
Originations were strong and the quarter, but repayments were also high.
C&I balances, excluding PPP loans declined by $256 million drill.
Driven by a $181 million decline and dealer flooring balances.
And of $41 million decline and shared national credits.
Strong demand for new cars, both locally and on the mainland depleted dealer inventories and drove down flooring balances.
Looking forward, we reiterate our view of full year loan growth, excluding PPP will be and the low single digit range.
Turning to slide five total deposit balances ended the quarter at $20 1 billion.
$906 million increase versus the prior quarter.
This increase was driven by growth of $1 2 billion.
And consumer and commercial deposit balances.
<unk> offset by a $269 million decrease and public deposits.
Consumer and commercial deposit balances in the first quarter benefited from both the stimulus payments and PPP loan disbursements.
Our cost of deposits fell three basis points to eight basis points and the quarter.
Turning turning to slide six net interest income was $129 $2 million.
And of $6 million decrease versus the prior quarter.
The decrease was primarily due to average yields.
The average yields and balances on loans.
Net interest margin was 255%.
And a 16 basis point decrease from the previous quarter.
As expected asset and liability repricing contributed about seven basis points to NIM compression.
Excess liquidity driven.
Driven by the significant increase in deposits added another six basis points of NIM compression.
And lower fee income because of the lower amount of PPP loans forgiven for.
First as the prior quarter contributed another three basis points of NIM compression.
The number of PPP loans forgiven and the first quarter declined from the prior quarter.
Due to reallocating resources from processing forgiveness applications to originating new PPP loans.
Have shifted those resources back to processing forgiveness applications.
Over the next few quarters, we expect PPP loan forgiveness, along with the stimulus money to caused liquidity levels to persist.
In Q2, we expect the net interest margin to decline, 5% to seven basis points, excluding the impact of PPP and excess liquidity.
Turning to slide seven noninterest income in Q1 was $43 $9 million down.
Down $9 7 million from the previous quarter.
Q4, noninterest income was elevated.
Due to onetime items, including a $7 $1 million gain on sale of loans.
The $1 $2 million gain from an unsettled tax liability and the.
0.9 million reduction and network associated dues, which was booked as contra income.
These onetime impacts in Q4 were offset by a $4 $8 million charge associated with the visa swap.
In Q1, our income related to customer swap agreements was down 0.9 million due to low customer activity.
And bully income was down $1 8 million.
Looking forward activity based items, such as credit and debit fees and merchant services and started to recover.
And we expect further recovery as tourism increases.
Swap fee income impacted by low loan growth and the stable low rate environment.
Most likely increase during the second half of the year and loan growth starts to pick up.
We also expect to recover and bully income and the second quarter.
Given these factors, we anticipate that noninterest income will bounce back to this 47% to $48 million range and the second quarter.
Turning to slide eight.
Noninterest expenses were $96 3 million $8 $2 million higher than the previous quarter and the efficiency ratio was 55, 5%.
Salaries and benefits increased approximately $1 2 million over the prior quarter.
And this was mainly driven by a small increase in salaries.
Annual bonuses and inflationary increases and our health care costs.
In Q1 of the bank launched its new website at <unk> Dot com the.
And the expenses associated with the implementation of the new website and other technology initiatives added approximately $2 2 million to contracted services.
In addition to support the origination of the second round of PPP loans in the first quarter we.
We added temporary support to help process over 3600 loans.
This led to one time expenses of around $1 million and the quarter.
Other operating expenses increased $3 3 million versus the prior quarter of.
Of which approximately $1 2 million was nonrecurring.
For the full year 2021, we continue to expect expenses to be about 7% higher than 2020 expenses and now I will turn it over to Ralph to go over asset quality.
Thank you Ravi if I could turn the turn you to slide nine I'll speak to our credit profile.
Asset quality continues to hold up and the signs of the recovery of starting to emerge.
And Q1 realized credit costs remained low net charge offs for the quarter were $4 five for $5 $9 million higher than our prior quarter, but within expectation.
Annualized net charge off rate was 14 basis points.
Lower than the rate for 2020, and 2019, we did not record of provision for the quarter.
And Tas and 90 days past due loans were marginally down this quarter with a one basis point decreased 14 basis points.
Criticized assets continued to decline.
Wrapping from for two three percentage of total loans in Q4 of 2020.
The 347%.
The anticipated increase and past due loans.
Excuse me, that's not yet materialized loans 30 to 89 days past due declined three basis points quarter over quarter to 27 basis points are returned to payment experience and COVID-19 related deferrals has been strong and re performance of those loans continues to be very good.
Moving to slide 10, we see a roll forward of the allowance for the quarter by disclosure segments.
The reserve decreased about $8 1 million to $204 million.
This amongst the $1 five 1% of all loans and $1 six 5% net of PPP loans.
Maintaining our view for the recovery and the second half of the year, our economic outlook was unchanged and the bank retained and COVID-19 related overlay as a component of the reserve.
While we are encouraged of asset quality metrics remained strong it is important for us to monitor factors that drive expected credit losses over the next one or two quarters looking for evidence of improvement before changing our outlook.
Turning to slide 11.
We show the composition of commercial the commercial portfolio by risk rating as of quarter and.
We continue the efforts to manage at risk credits with the intent to reduce future credit cost by executing on specific plans for each of these loans.
And since a peak reported at the end of Q2, we've seen a decrease of $281 million and criticized loans of 193 basis points. The reductions have come on the combination of loan sales and repayments refinancings and upgrades.
Special mentioned loans are down $262 million.
For 182 basis points from the Q2 peak and classified loans are down $20 million for.
For 10 basis points from the peak.
Finally on slide 12, we see the status of loans that have received deferrals at the start of the pandemic.
And about 97% of these loans by ballots have completed the deferral period.
And 196% of those borrowers have returned to payment with a small portion offer the second deferral based on additional considerations.
The performance continues to be strong delinquency rates slow.
At this point most loans that are under deferral or modification of our secured residential mortgages.
Now, let me turn the presentation back to Bob Thanks.
Thanks, Rob for a wrap up I wanted to say a few words about our technology investments and how they fit into our digital strategy. So if you go to page 13, where.
When you look at this with over 160 years of history, we served as the trusted adviser to our customers, creating deep and lasting relationships, while becoming the hub of their financial lives.
And the digital area, we had to rethink what it means to be a relationship bank and how we can evolve to meet customers' changing expectations.
With our digital transformation, we will continue to creating deep and lasting relationships and we use data and technology to improve the customer experience through access convenience and personalization.
From an infrastructure perspective, our plan is to build a scalable portable platform that will enable us to drive down costs over time.
As we've discussed on prior calls we continue to work on our core system replacement built.
Built on the micro services and open API framework. It will serve as the backbone that allows us and more flexible and modular approach to integrating our digital platforms and data sources.
And the first quarter, we completed several customer facing projects.
We introduced the refreshed <unk> dot com website.
Rollout of new online consumer loan origination platform and.
And a re imagined the personal financial management tool.
Additionally, we completed development of our new and enhanced mobile banking application, which brings new functionality.
Access to innovative budget and finance tools and the ability for us to deliver personalized experience and advice when it launches in the coming days.
With that I'll turn it back to Kevin.
Yeah.
Yes.
Silvio we'll take questions now.
Thank you, ladies and gentlemen, if you would like to ask a question. Please press star one on the development.
The pad again to ask a question. Please press star one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Ebrahim corner of Wawa from Bank of America.
Good morning, guys.
Good morning, and good morning.
I guess, just first question Ravi I don't go out margin outlook of five to seven basis points.
The decline can you tell us.
When that begins to moderate of weight like if for any stay as is when does that level off the <unk>.
My first seven points of basis points core decline.
Ebrahim this is Ravi.
I would say that as we start to.
See moderation and some of the refinancing activities on our balance sheet, that's one aspect.
The mortgage has been extremely active this quarter.
Fundamentally if you look at kind of where our Q1 yields where you've got a little bit of room.
Got a little bit of room, and the balance sheet for a little bit of repricing.
And the mortgage portfolio in particular, we feel like.
Feel like.
Theres, probably some more room and the securities book as we start to see kind of a moderation of the level. We're at $6 7 billion for the.
For the quarter, and where we see run off out of 102 of $120 million per month.
Rolling off and replenishing those depending on where spreads are and and yields are and we could see a little bit of decline and the securities book with respect to the NIM and then I'll just say maybe on the deposit side, one to two basis points.
And we could probably see some room for already at eight basis points for the quarter. So theres, probably opportunity there to see kind of where NIM will land and sort of for the long term.
And.
Whats the remaining PPP fees, how the that you expected to recognize and what's the timing of when you think it is going to amortize.
Yes, it's about 24% of $25 million.
Just over $25 million this is Bob.
And we go through the process as we've said before we have them on straight line amortization.
Of course that gets accelerated with forgiveness. So as we go through the forgiveness process. The first round from last year will be really.
Probably a lot of that will happen this year and the next 18 months.
But it's really the borrower dependent so it's not something we control.
And how much is the first was the second do you have that Bob the breakdown.
I don't have that but we can work on that for you.
Kevin do some of that Hendi.
Well the second round was around 400 and.
$59 million of new loans, he is talking about the fee for this.
Moving to the Dupont have that right now and we'll get back to you with the EBIT.
And that's point and.
And a separate note on the dealer finance loans, So I guess the drop off wasn't surprising what's your outlook there Bob in terms of does it come back given what's going on with the auto inventories etcetera, just give us a sense of where you see that business added and the next few quarter sure and.
That's a lot of time talking to them.
And the mainland of a couple of weeks talk to the more of them.
You look at the four year average and in 2019, our Outstandings were $850 million.
And right now were right about.
For the $400 million less and that so there is a tremendous amount of room for growth and while theres been some give and take on on.
The the lines.
Essentially the same size. So it really is driven by when manufacturers can come back up to speed and produce and volume which of course, we can't predict but.
Certainly expect some of that before year end.
And as the chip shortage and other supply bottlenecks get worked up we expect of pretty strong recovery and dealer flooring balances.
Got it. So you do you do think by the end of the sum.
Some of the $400 million gets picked up and then you may or may not have gone back for the $850 million this year depending on of.
With the one manufacturer.
Sure, it's not driven by us, it's really driven by the manufacturers of course, the dealers would like to sell a lot of cars and keep low inventory, but I think the dynamic will start to change as well as things normalize and the broader economy.
Got it thanks for taking my questions.
Your next question comes from the line of Steven.
The polls from J P. Morgan.
Hi, everybody.
And David.
Bob I wanted to start so if I look at the Hawaiian economy States, making good progress on vaccines visitor arrivals are improving and the unemployment rate is still a bit high how would you describe sentiment amongst business customers today and are they starting to move forward with increased spending and investment or are they still really waiting for.
For the economy, the more fully open.
I don't know for at the point, where they're ready to make that decision yet Steve I think theyre, just really happy that there is a lot more tourists and I think they are really trying to reengage and reopened strongly to be able to serve all of those tourists and like many places and have been some shortages of rental cars and that sort of.
And the hotels are ready to go.
And talking to those folks they're absolutely ready to go there are few little.
Kingston, the armored of workout restaurants again.
Opening at reduced capacity.
Struggling a little bit defined people candidly, even though as the high unemployment rate and the people I've talked to but that as well will work itself out fairly soon so.
Getting through the reopening and then looking at investment I think that will be the next step.
Okay.
Helpful.
And when we look at the reserve so even with no provision taken in the quarter of the reserve is the well above where you were after day. One. So you saw my questions. What held you up for more meaningfully releasing reserves this quarter and should we expect the pattern of no provision until the reserve gets closer the day once useful of Mt.
Yes, and maybe I'll start Steve This is Bob and I will hand, it off the Ralph really what we're looking for as well as we just talked about a lot of very good signs and the economy here is still a little bit early to make a call on recovery, yet and I think those are the indications. We're looking for so I think over the next couple of quarters, we'll have a better idea on that.
And Ralph anything you'd like to add yes, Steve I don't have a lot more to add I think everything is starting to line up the way that we had hoped it would and I do think that we just need to see what happens in next couple of quarters and see and this really takes it takes hold but.
I mean, our outlook was for a second half recovery and we're really starting to see that now.
Okay.
That's helpful and then on the on the PPP loans and is there any stats you guys could share in terms of how many of these for for new versus existing customers and COVID-19.
Have you been able to use that as a tool to bring new relationships into the bank.
We've done some of that we have a large customer base and so servicing our existing customers was the bulk of our loans quite frankly, there were some new relationships and it came into the bank with that interestingly.
Relative to I think some of the national numbers were seeing for the second round of majority of our borrowers of ore.
Already has gotten the PPP loan with us and the number of new PPP first time borrowers was less and I think thats, a little different than we saw and the rest of the country.
And that goes to where the economy has been and Hawaii.
People have been struggling and Thats really been and just a terrific bridge for them to get to the other side of this okay.
That's helpful and just one last one on the personnel related.
So I've been a big fan of Chris Dodd. So I was happy to see him get the promotion of C of O are you planning to backfill his prior role now or will he continue running the digital transformation.
He's in the room, so I have to be careful what I say Steve.
No.
We just the.
And just added to his responsibilities he is the.
A great work ethics.
He will still be.
Working on the digital transformation and and really what it comes down to is I just wanted to make sure that Chris had all of the tools to wrap around to do the full suite of not only <unk>.
Technology digital and transformation operations make sure they're all integrated and the.
And we'll get a better result of the end because of that okay.
Great. Thanks for taking my questions.
Youre welcome.
Your next question comes from the line of Jackie Bohlen from K B W.
Sure.
Okay.
I just wanted to go back to the.
The loan portfolio and talk about some of the other portfolios and just their performance versus expectations.
Understanding the question and then Paul and commercial and the reiterated overall of course guidance.
And the balance is behaving as you would have expected.
Yeah.
Yes, I would say.
I think we're doing better than we would have expected on the consumer on the consumer side. We had we had stood up and modification program and we had a lot of people working on putting something in place and we really didn't see that we saw really good returns of payment and and and as you can see from the statistics and and the slide not of lot of people on our second day.
For us so I think we're doing better than expected there and.
Jackie This is Bob and just want to make sure of is that your question or was a credit related question and there wasn't a growth related questions.
And that's related but I was going and get to the credit component okay.
Let me take.
Yeah sure let me, let me take the other side the unless you have the question for Rob but.
The growth the consumer.
The loan growth has been very muted over the last year, we just arent seeing a lot of demand in that space we're seeing.
Some in indirect auto as car sales have been strong, but even that is at a lower level than than it had been in previous periods of besides out other than I think residential lending and Ravi is or anything.
And anything else that has outperformed no I think that covers it.
Okay and the.
The consumer of decline is that purely a function of demand or is there some function of intended run off occurring and that portfolio.
Primarily demand, but there are a couple of segments of the portfolio, we were bringing down the.
The balance of the little bit really sub segments of the existing portfolios, but it's certainly not broadly and any of the different categories.
Okay and does that are you largely complete the or is it still a little bit more of a headwind and I know that and got it at major.
Drive for sure I'm just curious.
Absolutely a very fair question I think we're where we want to be and now it's going to be much more demand driven.
Okay.
And then you touched on the single family, but just curious I've seen a lot of contraction and other banks and <unk>.
And good expansion in the quarter.
Was that related to what May have been purchased first just put in the portfolio and maybe the mix is just a little different than some other banks or is there anything else at play there.
Jackie This is Ravi and certainly that was one of the components and Q1, we just had lower mortgage sales and the quarter and where portfolio and more.
On an absolute level I would just say that the activity levels and the mortgage business of and extremely high both both from our refinancing activity and now looking forward certainly from a purchase perspective and as we start to really move through the move through the the origination pipeline.
See potential good opportunity for us to continue to build balances and the future.
And maybe just a finer point on this is Bob so at some point the refinance will slow a bit just because of where rates are at.
We do have several projects later this year of large condominium projects.
We're supporting with the.
With the.
Loan opportunities and we think that will help us and the back half of the year.
Okay. Thanks.
Thanks, Bob that's helpful and.
And then just one last quick one and I'll follow up probably for you Ralph and I put my notes of the overlay with 28% of the reserve at year end do you happen to have that number.
Or just the the demo place of it now.
It's about the same same same level.
Okay. So net change.
Great. Thank you everyone.
Your next question comes from the line of Andrew <unk> from.
Piper Sandler.
Hi, good morning, everyone.
And the plan.
The question just on the the margin guidance the.
Down 5% to seven basis points, excluding the impact of Pvp and excess liquidity. So is that excluding the six basis points and the three basis points that you highlighted for.
For this quarter, so should we add that back in and then take out the from five to seven basis points.
It does exclude those two components, but given where we are right now.
Maybe I'll give a little bit of color on each of those components.
Excess liquidity.
With respect to what's kind of what could potentially happen and the future certainly we haven't seen the next round of stimulus come through and since Andrew we have the state operating accounts.
Potential and there is potential opportunity and in terms of liquidity.
State operating accounts could increase over time, and and maybe impact the <unk>.
The the NIM and particular with respect to you know.
And how much we have on the balance sheet in terms of excess liquidity. So there is there is some uncertainty on and the amount of excess liquidity, we could experience over the next couple of quarters on PPP loans, and we certainly back to going back to focusing on forgiveness and so to the extent that forgiveness picks up and the next couple of quarters.
We could also see sort of an uptick on the margin as a result of that so those are the two factors that are outside of the five to seven basis points that have some sources of uncertainty for the future.
Got it okay. That's helpful. Thank you and.
And then the fee income guidance for rich.
The return to a rebound of the $47 million to $48 million range.
I guess I would've thought of.
And I back up from the non core items and the fourth quarter fees of closer to $50 million and the third quarter closer to 49.
I would expect it, especially where the state reopens and tourism coming back stronger that and you could.
Net fee income could actually come and stronger than that then the range of providing I guess, what what sort of conservatism do you think you might have there or what are you seeing that that I might not be.
And maybe I'll hit on a couple of items of the excellent question.
I think two of the previous question, we are certainly portfolio mortgage loans on the book that contributed about $1 million and noninterest income.
In terms of the difference quarter over quarter, and so that's sort of a muting effect on kind of of what we're what we're seeing and just say that activity levels, particularly in credit and debit card fees.
And we respond over time, but that will take some time as tourism recovers and maybe just thinking a little bit about the deposit fee line and service charges, Darren I would just say that.
And we're benefiting in many ways from a significant amount of liquidity on the balance sheet and certainly from the from the credit perspective, but that tends to have a muting effect on service charges on deposit accounts because customers have a lot of liquidity and Thats. The result, those fees tend to tend to tend to be muted and.
And that and that area. So when you put all of those pieces together, Andrew that's kind of why we've given the 47% to 48 guidance.
Got it okay.
And that's very helpful. I'll step back thank you.
At this time I would like to remind everyone of you would like to ask a question. Please press star one on your telephone keypad again, Thats star one to ask a question.
Your next question comes from the line of Jared Shaw from Wells Fargo.
Hi, guys good morning.
Good morning, good morning, good morning.
And I guess going on and looking at the Tech investment.
And the Tech plan are you are you planning on having the centralized under one provider or is this going to be go out and get the the best of each of each option and then.
Aggregate things together on on the the backend.
Very good question Jared This is Bob.
It's a complicated answer to be honest with you we have one core provider that does our core services.
Around that core provider and Thats Fas and around them, we have a number of different.
Systems that we use from outside providers for example, or credit card provider for many many years has been pieces and.
Our ATM driver of somebody else so that debt.
The World is while we're simplifying it quite a bit by moving to our new core it isn't a monolithic and we do have other systems that we are wrapping around that and doing it with the API and micro services technology to make it very streamlined and seamless but no. It's not just one core provider for for ever.
We use and.
And then going forward when you have those micro service based systems will you be able to.
Taylor of products or make tweaks here or there and house or all of that you still need the depend on.
Partners to help help implement those changes.
It's going to be a combination of both.
One of the advantages of the micro services architecture is that you can swap out providers relatively easily and then for what theyre offering that youre using and you have a choice generally of how much you want to customize and so the benefits of customization versus the the cost of creating and maintaining the cash.
From my system is something that you have to weigh for each one of the different offerings.
Okay, great. Thanks, and then just more broadly on the reopening and of the tourism returns.
Is the is the labor pool.
And market sufficient to to handle a a full reopening it or it will part of that depend on people coming back to the island that may have left some.
And the past you had mentioned the.
The the more hourly wages or the the people at the.
Sure.
From facing areas had left or are they coming back or are we.
So I'm going to wait to see the the pool increase.
I don't have.
Perfect clarity on that to be honest with you and I think some people might have left I think.
A lot of people are getting help from various support programs government provided and so thats been a big help for them and there has been as you've seen and other places somewhat of a reluctance to go back to soon to work and those the support programs are in place, but I don't think there has been and exited to the point.
Where we wouldn't be able to support of fairly large returned two of tourists economy and remember it wasn't that long ago and 2019, we had.
10 million visitors and.
I think part of the reluctance to return to work is.
People and they get their vaccine shots first and.
So with all of this dynamic happening at the same time I think we're good for awhile and time will tell as we get back to really full employment and.
The robust tourist economy too early to make that call.
Great I appreciate the color. Thanks.
Once again I would like to remind everyone in order to ask a question. Please press star one on your telephone keypad.
The next question comes from the line of Laurie Hunsicker from Compass point.
Yes, hi, good morning.
I guess I just wanted to make sure I'm reading this right on slide well I'm looking at it the deferrals from adding the original plus the subsequent I'm and 81 million of.
Total deferrals for your bank, that's down from 725 million last quarter is that correct.
Let's see on pulling up the slide.
Yeah, So I'm looking at the of rates and all deferrals are now at 11 million call. It all and then the subsequent deferrals selling at 70.
And just 81 million.
Okay correct.
That's that's fabulous okay great.
And then Ravi I wanted to go back.
The expense guide. So you you reiterated your still looking at out of 7% up relative to last year. If you look at the quarter, you're $96 three if we strip out that the non recurring or youre down to 95, but then that's suggesting that youre going to be running at $99 million or so per quarter for the next two quarters can you just help us think about that.
Or what am I missing.
Let me go through some line items to kind of get you to.
Kind of where we see things going in the future.
And we certainly.
And we see as I've mentioned and the previous call card reward expenses.
<unk> to move up as we start to see increases in activity over the course of the year.
Q1 tends to be a little bit elevated because we look at it and our readers and we're coming off the holiday season. So for the rest of the year, we could see.
Typically lower levels in Q1, but as activity increases those numbers will go up I think we've talked a little bit about expenses related to the inflammation and implementation of core we're going to have trading expenses that'll be expensed.
And then as you look to the core of being implemented we will pick up some and depreciation expense also.
And we've talked about the investments we've made in technology, and the new <unk> Dot com, where and the process of refreshing our mobile application and then as a result of marketing and advertising expenses will increase and overtime as we support the new website.
And we put in some of these technology applications and we support the new mobile application too and I <unk>.
Think as we as we continue to.
C Inc.
The increased loan demand over the course of the second half of the year, we should see incentive comp increases from Q1 levels and that will that will also cause cause of our expenses to move up a little bit.
And then looking at sort of the regulatory fees, we have a bigger balance sheet.
And the bigger balance sheet means and a regulatory expenses will probably increase over time, but those are some things to sort of anchor around as you look forward to kind of what we've given as guidance and where we are currently of that.
Okay.
Yeah. That's helpful. Thank you and the how should we think about tax rate.
Our next year.
Yeah, So our tax rate I think.
Our taxes in particular, I think our tax rate was a little bit below 25% and the quarter.
What we have currently is.
In terms of tax credits as a pretty strong light tech portfolio. So if you think about that is the absolute dollar level of tax credits to offset sort of tax expense as we look to the future and frankly activity picks up.
Loan demand increases, we're going to start to see increases and the performance of the firm and so when you think about a fixed amount of credits against and the increasing sort of.
Revenue base, you're going to see a pressure on the tax rate going forward, but that's a good thing because we're earning more money.
And we're certainly looking at that tax line to try to manage that very closely.
Okay, great. Thanks, and then just one last question.
On the P. P P fees and I appreciate the the slide six and the clarity of Kevin.
But can you just help us think about what for PPP fees and this quarter and if you have the split between what was the 1% and what was the forgiveness and I think I have the level of P. P. P. P is for last quarter was the million and a half just wanted to know what the breakdown was and net interest income for the quarter.
And so.
<unk>.
Please go ahead.
Let me see if I'm getting that question correct. Laurie you are asking about the breakdown between forgiveness and fee income in the quarter.
Yeah, well, specifically what I'm most of what I'm. Most focused on is what was the forgiveness of Mt.
First one for sandwiches, obviously dragging on your margin, but the forgiveness of kind of works the other way and so yeah. What was the forgiveness amount in the quarter and I believe for last quarter. It was the 1 million and a half.
And I could have last quarter's wrong. So yes, so what I have.
And this quarter it was about 1 million and a half and forgiveness and last quarter is estimated a little bit of over 2 million $2 two.
With two point I'm, sorry to point you to.
And $2 two two.
To your point, yes, perfect. Thank you for taking my question.
And I show no further questions at this time are there any.
Further remarks.
And just wrap up by saying, Thank you Sylvia and thanks, everyone for joining US. We appreciate your interest in the first Hawaiian please feel free to contact me. If you have any additional questions have a good weekend.
Ladies and gentlemen, this does conclude today's conference. Thank you again for your participation you may now all disconnect.
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