Q4 2021 First Hawaiian Inc Earnings Call

January 21, 2022

Good day, and thank you for standing by. And welcome to the first Hawaiian Inc. first-quarter 2021 earnings Conference call.

At this time all participants are in a listen-only mode. After the presentation, there will be a question and answer session. To ask a question during that session you will need to press star one on your telephone. Please be advised that today's conference is being recorded.

If you require any further assistance, please press star zero. I would now hand the conference over.

To Kevin Haseyama, Investor Relations manager. Please go ahead.

Thank you, Carmen. And thank you everyone for joining us as we review our financial results for the fourth quarter of 2021.

With me today are Bob Harrison, Chairman, President and CEO.

And Ralph Mesick, Chief risk officer, and interim CFO.

We have prepared a slide presentation that we referred to in our remarks today. The presentation is available for downloading and viewing on our website at [inaudible] com in the Investor Relations section.

During today's call, we'll be making forward-looking statements. So please refer to slide one for our Safe Harbor statement.

We may also discuss certain non-GAAP financial measures.

This presentation contains reconciliations of these non-GAAP financial measurements to the most directly comparable GAAP measurements.

And now I'll turn the call over to Bob.

Thank you, Kevin and good morning, I appreciate you joining us today. I will start with an update on the local situation on slide two.

Similar to the rest of the country, we are seeing a surge of new COVID cases.

Fortunately, with over 75% of our residents are fully vaccinated and about a third of the population having received booster shots, hospitalization remains

Below the peak levels that we saw in September.

The [countermeasures] are closely watching their case counts and hospitalizations and working with the governor due to determine if additional policy changes are necessary.

Speaking with friends on the hospitality industry, anecdotally, the holidays were good and January was relatively strong.

However, they are definitely seeing weaker bookings in February.

We're seeing continued improvement in the economy with unemployment down to 6% here in Hawaii most recently.

And if you turn to slide three you can see that we had a very productive fourth quarter and saw strong and broad-based growth and loans excluding PPP.

We also saw continued growth in consumer and commercial deposits.

Earnings this quarter were impacted by some balance sheet actions, we took to position us going into 2022, but our returns continued to be durable capital levels strong and credit quality remained excellent.

Net income was $57 million and a return on tangible equity was 13.47%.

Diluted EPS was 44 cents.

And the board maintained the dividend at 26 cents per share.

During the quarter, we repurchased $21.5 million of our common stock under our current repurchase program.

And the board adopted a $75 million repurchase program for 2022.

Now I'll turn it over to Ralph to go over the financials.

Thanks, Bob. Turning to slide four and building on Bob's comments. You should note we took some actions in the fourth quarter to improve the balance sheet position going into the new year.

At December 31, total assets fell 2.2% over the prior quarter to $24.99 billion.

But the changes in the balance sheet, and our plan and will be accretive to income in 2022.

We worked to move some public deposits off the balance sheet and deployed excess liquidity into loans and securities.

A change in mix improved our interest income for the quarter.

We also use some of the cash to prepay $200 million of FHLB advances this quarter for a total savings of about $12 million in interest expense. The reduction in cash also reduced deposit insurance costs and improved our capital position.

Turning to slide five.

Period end loans and leases were $13 billion.

An increase of $128 million from the end of Q3.

Excluding the impact of the PPP loans.

Total loans increased by about $414 million or 3.4% for the quarter.

The growth in loans was broad-based with increases in C&I, CRE residential home equity and credit card.

Construction balances were down due to scheduled completion at payoff of several large for sale projects.

With continued draws on other projects helped to offset the pay downs.

The completion of these projects contributed to residential loan growth in the quarter.

Looking ahead to 2022, we're expecting loan growth ex PPP to be in the mid to high single-digit range. The variability is driven by uncertainty around the return of dealer flooring balances.

The low end represents a scenario where we do not have significant contribution from dealer flooring, while the high end represents a gradual normalization of flooring balances.

In the latter scenario, we would expect most of that growth will be back loaded into the second half of the year.

Turning to slide six.

Deposit levels fell by 1.4% or $304 million to $21.8 billion at year end.

But the composition shifted significantly.

Public deposits declined by almost $1 billion, while noninterest bearing deposits grew by about $520 million.

Our loan to deposit ratio was 59% at year-end and the cost of deposits was unchanged at six basis points.

Turning to slide seven.

Net interest income was up $4.7 million over the prior quarter to $137.3 million.

The improvement was attributed to deployment of cash into securities and loans as well as higher fees from PPP forgiveness.

The net interest margin was 2.38% up two basis points from the prior quarter.

Higher PPP fees accounted for six basis points of the increase.

Excluding PPP fees. The NIM would have declined four basis points in line with our outlook of the two to four basis point decline in Q4.

Beyond Q4, the impact of PPP fees should diminish significantly since there is only about $5 million remaining.

And looking into Q1, the balance sheet actions, we took in Q4 should add four to six basis points to the NIM, but we're also expecting a significant drop in PPP fee income, which could negatively impact NIM in the 10 to 12 basis point range. So net net the reported NIM could decline around 6 to 8 basis points.

From the 2.38% reported in Q4.

Looking forward, we feel that the asset sensitivity of the balance sheet provides good upside potential for NIM and net interest income heading into 2022.

About $4.8 billion of the loan portfolio reprices every 90 days or less and another $3.3 billion.

In fixed rate loans and securities repriced in 12 months.

On the funding side, rates paid on deposits in our market have historically been less sensitive to rising rates and in mainland markets and this will help funding cost down.

Turning to slide eight.

Both noninterest income and expense were impacted by nonrecurring items in the fourth quarter.

Noninterest income was $41.6 million this quarter, which was $8.5 million lower than Q3.

We took a $6 million charge on the funding swap for the visa class B shares sold in 2016 and realized $2 million less in bully income.

Our normalized run rate is about $48 million per quarter.

We remain focused on growing noninterest income and feel there's good potential upside in 2022 as economic activity picks up and interest rates increased.

Noninterest expense rose $7.7 million to $108.7 million.

About $9 million of that increase was the termination fee for the FHLB advances previously discussed.

Going forward, we expect 2022 expenses to increase 6.5% to 7% over 2021.

With about one third of the growth coming from inflationary impact in increasing levels of business activity.

One third coming from expenses related to the new core platform and one third from additional tech investments.

Moving to slide nine. Asset quality at year-end was strong. Realized credit cost in the quarter were low and the level of NPAs criticized credits and past dues.

Decreased over the prior quarter.

We did not record a provision expense this quarter.

Net charge offs were $6.2 million for the quarter and $12.5 million for the full year or 10 basis points 13 basis points better than the rate for 2020.

NPAs and 90 day past due loans are flat this quarter and the level, it's four basis points lower than the prior year.

Criticized assets continued to decline dropping from 2.98% of total loans in Q3 to 1.6% in Q4. This level is 263 basis points lower than year-end 2020.

Past due loans decreased from the prior quarter.

Loans 30 to 89 days past due declined 12 basis points to 23 basis points at the end of Q4.

Moving to slide 10.

You see a roll-forward of the allowance for the quarter by disclosure segments. The allowance for credit loss decreased $4 million to 157.3 million.

The level equates to 1.21% of all loans of 1.23% net of PPP loans.

The decrease in the ACL level is due to improvements in commercial credit quality.

The reserve for unfunded commitments decreased $2.2 million to $30.3 million.

Our economic outlook was unchanged in Q4, primarily due to the renewed uncertainty related to the omicron variant that could impact boys recovery in credit losses.

Let me now turn the call back to Bob for any closing comments..

Thank you, Ralph. And we really appreciate Ralph stepping up to be our interim CFO.

We appreciate his effort on that.

To recap, we've had a good 2021 and are well positioned for 2022.

The local economy showed continuous recovery when we get past the current COVID-19 surge. As we saw last summer demand for travel is high and Hawaii remains a favorite destination.

The loan pipeline looks good as we start the year and our balance sheet is well-positioned to fund the loan growth and benefit from rising interest rates.

Capital levels remain high and we have sufficient capital to support our balance sheet growth while maintaining our key capital ratios at our desired targets.

We're also continuing to work on building out our digital infrastructure and are on track to complete our core conversion in the second quarter.

The new platform is designed to give us flexibility to integrate new and different applications quickly.

As well as enable us to scale via partners.

The outcome we hope to achieve is simple. We want to provide customers with better tools to manage their finances and to be more convenient to do business with us at any time from anywhere.

Early indications are encouraging. Customers who are signing up on our platforms are more engaged and doing more with us.

We need to continue to build out this experience.

And work on increasing adoption with existing clients and make this part of our broader value proposition to bring in new relationships.

The future will be different but our business is still about gathering deposits, making loans and providing complimentary financial services.

And now we'd be happy to take your questions.

Thank you.

As a reminder, to ask a question you will need to press star one on your telephone. To withdraw your question, press the pound or hash key. Please standby, while we compile the Q&A roster.

The first question comes from Steven Alexopoulos with JPMorgan. Please go ahead.

Hi, everybody.

Hi, Steve.

So I first wanted to follow up on the loan outlook. Mid to high single digits pretty good. On the dealer business, is it fair to say that we saw Huntington report this morning to their dealer business was up a little bit. That at least at the bottom tier and then within that range moving to the high to the low end is it all about just the change in line utilization.

Are you guys also growing dealers still? Or is it purely whatever utilization is that will dictate where you are in the range?

Yes, a great question, Steve. And maybe just we have seen signs of a bottom.

In that portfolio every month during the quarter, we saw an increase in flooring balances.

While we ended the quarter up $50 million, it finally seem to have bottomed out for us as the manufacturers get their production lines back and say.

As we look to the outlook for 2022, it really is dependent on that.

Production levels and the consumer.

We have added some more customers. We have seen some flux during the last year that some customers have sold. We've been fortunate to retain the relationship with the buyer, but there's also been an addition of some customers. So it's going to be a mix.

<unk> been fortunate to retain the relationship with the buyer, but Theres also been addition of some customers. So it's going to be a mix but.

Yes, it's really hard to predict the flooring balances for this year and that's why we gave that range already outlook. Okay, but Bob even if you're at the low end of the range, mid-single-digit is a pretty big an improvement over 2021. Could you give us a little more color? What what's driving that? Is it just a core C&I is commercial real estate picking up?

Yes, we're seeing a number of things I think C&I ex flooring would probably be towards the bottom of the list, but we are definitely seeing CRE residential home equity has been strong as well.

C&I ex.

Lauren would probably be towards the bottom of the list, but we are definitely seeing CRE residential home equity has been strong as well.

A bit on the consumer. And as I've mentioned in previous calls, we are seeing the mainland come back first and Hawaii we think we will come back soon after that but we're definitely seeing the strength in the mainland.

Consumer and as I've mentioned in previous calls we are seeing the mainland come back first and Hawaii. We think we will come back soon after that but we're definitely seeing the strength in the mainland.

Okay. Is it safe to say you have a fairly high degree of confidence that at least you'll be at the low end based on these other drivers and then?

Yes.

Is it safe to say you have a fairly high degree of confidence that at least you'll be at the low end based on these other drivers and then.

The variability will come on dealer, right?

That's correct.

That's our outlook. Okay got you. And final question on expenses.

Ralph, I appreciate the breakout on the 6.5% to 7% range to one third from inflation one third.

[inaudible] And then one-third additional tech investments. So is the right way for us to think about the company as well.

It will take, moving forward like long term just what's the cost inflation of first Hawaiian.

Maybe the inflation is not the same but those other two thirds right. Just continued investment I don't know if tech investments you're ever going to stop. That's about a good run rate for the company beyond 2022.

No, I would say that in terms of the core platform conversion, probably add another basis another 1%.

On a normalized basis, and then I think the tech spend is going to be kind of a function of what we see. We're trying to size this tech spend so that we can grow into the spin.

But I think going into 2023, probably more along 4% to 5% would be sort of what we would think in the high end is more than that.

2023, probably more along 4% to 5% would be sort of what we would think in the high end is more than that.

Okay, got you. Thanks for taking my questions.

Thanks, Steve.

Okay.

I am sorry. Our next question is from Ebrahim Poonawala with Bank of America. Your question, please.

Hey, good morning.

Good morning.

I guess just one.

Ralph, for you on the margin. You said you gave pretty good guidance around.

Net-net six to eight basis points decline in the fourth quarter.

Just remind us about the rate sensitivity, what we should expect in terms of the margin benefit from each.

[fed rate hike].

Assuming fed moves in March. What does that mean for the margin?

For the second quarter, and then for subsequent rate hikes.

I think the best way to think about that is just to look at the composition of the portfolio how much assets reprice. We do model rate shocks under different scenarios and we tend to run those more from a risk management standpoint to understand our interest rate risk. And I think forecasting the NIM out beyond a certain period of time, there's a lot of challenges to that.

The best way to think about that is just to look at the composition of the portfolio how much assets reprice, we do model rate shocks under different scenarios and we tend to run those more from a risk management standpoint to understand our interest rate risk and I think forecasting the NIM out beyond a certain period of time, there's a lot of challenges to that.

So I think really sort of looking at that $4.8 billion.

$4 8 billion.

That is basically floating rate and re prices within every 90 days and then about $3.3 billion.

That would be running running off kind of normal amortization over the course of the year.

And then on the deposit side, I think we have about $12 billion.

That is sort of interest-rate sensitive. As we sort of seen historically in our marketplace.

We tend to lag the mainland in terms of increases in deposit costs.

And that tends to happen a little bit slower over a couple of quarters.

Understood, and within that $12 billion in deposits. Do you have any index deposits that could replace immediately with the fed hike?

We didn't.

$12 billion in deposits do you have any index deposits that could replace immediately with the fed hike.

No. Alright, okay.

Alright, okay.

Got it. And just one separate question, Bob, so you mentioned, you've talked about mainland leading the charge for a few quarters now. When we think about the split like if you had to guess 5% to 6% loan growth how much of that do you think comes from mainland?

versus Hawaii. And are you doing anything different in the mainland today versus pre-pandemic?

No, we're not doing anything different.

I don't have my fingertips the breakdown with the 5% to 6% would be mainland versus Hawaii.

Because of that mix of consumer and residential home equity lines, that's all Hawaii based.

We're not doing any of that in the mainland, but we do have kind of our guide has been.

The percentage of our loans on the mainland. I believe at the end of last quarter, we were 18% at the end of this quarter.

19%. We were as high as 23%, I think 23, almost 24% in the past. So there's still a lot of room to grow there without we think being overweight on the mainland.

And we haven't changed anything we're doing up there. It's the same lines of business, the same people.

Mostly the same customers, but we have been successful in bringing over some new dealer customers over the last year.

Successful in bringing over some new dealer customers over the last year.

I think the growth too.

Okay.

It's around 18%.

Quarter over quarter on the mainland and about 13% in Hawaii. So we're seeing growth in both markets right now.

Okay.

[inaudible]

On annualized basis, yes.

It was pretty strong.

That's with respect to the commercial portfolio.

Noted. And just one last follow up around the dealer floor plan. Can you remind us where those balances in the fourth quarter [either period] average versus pre-pandemic?

Total I believe was about $639 million at the end of the fourth quarter last year.

Yes.

2019? The 2019 and I want to say 859 million 860, right in there.

2019, and when I say $859 million 60, right in there.

So we're down still pretty substantially. About 227.

Got it, so it's 39 versus 59 pre pandemic.

Alright, thanks for taking my questions.

Keith.

Thank you. Our next question comes from Andrew Liesch with Piper Sandler Your question, please.

Hey, everyone. Good morning.

Thanks for the clarification around the bulk of the loan growth there and dealer flooring.

My question revolves around the expense guide.

And I'm, sorry if I missed this but what base should we be using? Should be the full year of $405 million and build out that or should we be backing out some of

The nonrecurring items that took place over the year.

I think I would start with the 405, Andrew.

Got it, okay.

I guess that's pretty high. Are there other nonrecurring items that might contribute to that but that may that you see on the horizon?

Hi are there other.

Nonrecurring items that might contribute to that but that may that you see on the horizon.

Nothing, nothing really sort of out of the ordinary here, there's always like every year, there is things that come in and out.

Okay. Alright. You've cleared all my other questions. I'll step back here.

Alright.

All my other questions I'll step back here.

Great. Thank you.

Our next question comes from David Feaster with Raymond James. Your question, please.

Hi, good morning, everybody.

Alright.

I just wanted to follow up on the loan growth side. The [revenue] mortgage growth from the take out mortgages o the time of the construction projects has been a nice tailwind. I'm just curious kind of where we are in that and how much more embedded growth there might be from those projects. And then just.

The C&I, excluding the dealer floor plan. I'm curious what you're seeing on that front. That was great growth to see whether it was increased utilization or new commitments and just what you're hearing from your non-floor plan C&I clients.

Yes, maybe I'll start. This is Bob, David and turn it over to Ralph afterwards. For the C&I side, we are starting to see finally some.

We hope bottoming out in the corporate area, but we haven't seen the sustained growth in that area yet so really the C&I growth. I think we're going to see near term, we'll probably be in the dealer flooring side.

For the residential real estate as we've talked about before we had three large projects complete during the quarter two, which we did the construction financing on.

We don't have any big projects.

Completing in the first quarter of this year. We do later in the year. So I think that that will not be as much of a factor for the first quarter or two but we're still seeing continued activity prices are still very strong here given the rise in interest rates. It seems likely we will see less refinance.

And it will change more to a purchase market, but Ralph anything you would add to that? The only thing I would add is we will probably have less turnover of the portfolio as rates rise. So I think in terms of our ability to grow balances. That will be that will help sort of offset maybe some of the benefit you get from refi market. Yes, then maybe lastly.

We are seeing more activity in the home equity side as rates have gone up so people are pretty quick to pivot over there.

That's a good point.

And then just you saw a pretty nice improvement in the criticized in past due balances. Just curious your thoughts on overall asset quality, what you're seeing out there maybe just some competitive dynamics.

On loan pricing, how structure is holding up and just whether you're seeing anything that's causing any concerns.

Okay.

Maybe I'll start and turn it over to Ralph.

The pricing is competitive, very competitive.

We have not seen it as much in the structure, but were definitely seeing pricing competition, but yes.

Yes, I think in terms of asset quality.

The larger customers I think they have been able to make a pivot.

To kind of what seems to be kind of a new normal. So I think from that perspective, we're feeling fairly good about that and then I think as we go into the new year, obviously, what we were able to do with the pandemic was getting really close to understanding some of the sensitivities that are smaller customers have so we'll be able to sort of keep tabs on that.

What seems to be kind of a new normal so I think from that perspective, we're feeling fairly good about that and then I think as we go into the new year, obviously, what we were able to do with the pandemic was getting really close to understanding some of the sensitivities that are smaller customers have so we'll be able to sort of keep tabs on that.

So I think as I said, we're well reserved.

Going into the new year and hopefully, we can sort of make this shift in the recovery is something thats less benign than we had anticipated.

Hopefully.

We can we can sort of make this shift in the recovery is something thats less benign than we had anticipated.

Yeah.

Yeah No kidding.

You guys have also been very thoughtful on the tech spend and the build-out over the past couple of years and conversions upcoming. I'm just curious where you think we are with the tech build-out maybe how conversations are going with the potential partnerships and maybe what kind of partnerships you're most interested in are you looking at banking as a service or just what kind of partners.

And are you looking at investments as well just any commentary on that front?

Yes, maybe. This is Bob, David, just a couple of comments, we're still early days into that while we're talking to people a lot of the work we're doing is pretty foundational enabling API infrastructure.

As Bob David just a couple of comments, we're still early days into that while we're talking to people a lot of the work we're doing is pretty foundational enabling API infrastructure.

Redoing our consumer loan platform, which we've done getting more functionality to our website and being able to make it easier for the customers interact with us. So it's really that for now and then taking that next step of really engaging the customer more actively.

In the technology space and really finding out what they need to their data and seeing how we can better address those needs with our products and services. So there's still a little early days to be talking about specific areas. At this point, we hope to be able to do that later this year.

Okay, sounds good.

Thanks, everybody.

Thanks, David.

Thank you. Our next question comes from Kelly Motta with [KBW].

Hi. Thank you so much for the question.

I wanted to ask you a bit about capital. I saw the buyback got renewed just wondering about your appetite for share repurchases.

Share repurchases.

How you're thinking about prioritizing [capital return].

Prioritizing.

Sure. Great question.

Really we love to use our capital to fund loan growth.

And then excess capital as we define that we've been planning on returning to shareholders. So we are still keeping with our guide of common equity tier one of 12% clearly above that now, but as you look at our loan outlook clearly some of that capital.

Just from a very low risk weight securities and into higher risk-weighted loans will be used for that.

But anything excess of that we would be using that for our share repurchase and also keeping an eye on the leverage ratio at the same time.

Great and then I just have a follow up on the NIM guidance.

That's six to eight basis points.

Lower from 4Q. Is that just for 122, and then as a follow up beyond that?

It's kind of further NIM expansion outside of the balance sheet actions you took [a function of rates]

Or how should we be thinking about the margin from there?

Yes, we think we're getting to a point, where it's bottoming out. This is Ralph.

And actually what we're seeing in say like the mortgage book, what we're putting on the books today, probably about at 8%

higher than the average portfolio yield right now.

So we're hopeful that we're sort of hitting this bottom point. And then obviously if we get rate increases given the composition of the portfolio, we think that's going to be positive to the bank.

The composition of the portfolio, we think that's going to be positive to the bank.

Great. Thank you.

And our next question comes from Jared Shaw with Wells Fargo.

Hey, good morning, everybody.

Good morning.

Can you just update.

So with the loan growth this quarter, what portion of that was shared national credit growth versus non shared national credits?

Growth versus.

Non shared national credits.

Yes.

Yes, I do. Actually, it was up about $7 million. $7 million of shared national? Okay. Yes, yes, it's not very much.

Actually it was up about.

About $7 million.

$7 million of shared national Okay, Yes, yes, it's not very much.

When you look at that C&I growth that

separate from the floor plan and separate from the shared national credit.

What's really driving that?

Is that the utilization rate or is that new customer acquisition? I guess sort of a separate from those two components.

We had a couple of large transactions this quarter.

With existing clients that really sort of helped in that area.

That was probably a big big part of the C&I growth and what we're kind of thing with kind of non-real estate customers is actually a lot of activity.

In real estate, so owner-occupied real estate and some maybe equipment, but not a lot. I think on the utilization side.

With the large corporates, we saw a little bit of a dip in utilization in the fourth quarter.

So that really hasn't come back yet.

Okay, and then just looking at the sort of cash securities dynamics with being able to deploy that this quarter, where do you think where would you like to see the cash levels?

Trend to that broader growth backdrop that you've laid out.

I think we're kind of around the level that we want to be today plus or minus.

Today.

Plus or minus.

I think from a liquidity standpoint.

Right now we have I think a lot of sources to tap so, but I think just given the composition of the balance sheet expectation of rising rates.

Probably the level that we're at today and we took a lot of actions to reduce our cash levels in the fourth quarter. So I think we're probably going to stay around that level, we would anticipate.

Okay. And then just finally for me any update on the on the CFO search.

In terms of timing or thoughts. Any update you can give us.

Timing or thoughts.

You can give us.

Sure. This is Bob. I'll take that question, we have engaged with Korn ferry and the search is ongoing and this is a team we've worked with before so were launching right into it.

Okay. Thank you.

Thank you. And as a reminder, if you have a question simply press star one on your telephone.

We have a question from the line of Laurie Hunsicker with Compass Point.

Yes, hi, good morning, good morning.

So just wanted to go back to shared national credits here, what is your balance and then what's the split Hawaii versus mainland?

So shared national credit in mainland is about $873 million.

In Hawaii, it's about $262 million.

Great.

And then your C&I charge offs were pretty outsized I mean, obviously your credit is.

Your C&I charge offs were pretty outsized I mean, obviously your credit is.

It's practically impeccable, but can you help us think about what happened there with $4.1 million in C&I charge offs and were any of those?

What happened there with $4 $1 million in C&I charge offs and were any of those.

And if so.

Can you help us think about what was mainland versus of Hawaii?

It was a local local credit, actually it was a single credit.

And actually, I think the circumstances around out, we took a write down on the credit.

I think the circumstances around out.

Look a write down on the credit.

And pretty much kind of an idiosyncratic type situation, not really related to.

The economy, or even [business stresses] sort of a litigation related issue.

Okay.

Great. That's helpful and then just going back to your

Arching comments I appreciate all the color there.

Can you help us think about with all of your balance sheet actions?

Maybe a refresh look on your interest rate sensitivity as it pertains to rate shocks in other words in an up 100 basis point as of September 30.

Your impact on NII was positive 14%. Can you just help us think about what that looks like?

With all of their balance sheet action factored in.

Yes. I would go back again to just sort of just taking a look at the asset repricing. I find it really difficult to take the model and take out more than a quarter and say well. This is what's going to happen to rates because there's so many factors that go into that.

Go back again to just sort of just taking a look at the asset repricing.

Find it really difficult to take the model and taken out more than a quarter and say well. This is what's going to happen to rates because there's so many factors that go into that.

And what we disclose really is more of a static type of a situation, which is probably not representative of what we'll see.

Yes. [inaudible] 10-K, obviously.

Sure.

10-K, obviously.

Right. Okay, and then when in the quarter did you actually prepay your $200 million of FHLB costing 273.

So around November.

Early to mid November, Laurie.

Okay, great.

Okay. Great and then.

How should we be thinking about tax rate? It was obviously low this quarter at 19% that's forming is going to be back to what we [inaudible]. Can you help us think about that a little bit?

Yes, we had a couple of true-up items that we took in the fourth quarter that took the rate down. So we will probably I think it's 25% is probably where you should sort of target the tax rate to be overtime.

Okay. Great and then just last question for me I just wanted to make sure that I got this right on expenses.

I think you gave was 6.5 to 7. 5% increase over 2021, is that correct?

6.5% to 7% in 2022.

In 2022, okay, great and so.

6.5% to 7%. Okay and then just looking at the base of your $405 million, even if I adjust that just given the two big items right, you're I think there'll be prepays in your litigation. You're at $394 million to your year over year increase was 9% to 10%.

For 2022. Can you help us think about I mean, I think most of us on the south side of price targets are derived off of 2023? Can you help us think about when you look out to 2023, what sort of percentage increase I assume we're not going to be using that same sort of core 9% to 10% increase. Can you help us.

think a little bit about more forward looking expenses. Thanks.

Q4 2021 First Hawaiian Inc Earnings Call

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