Q1 2022 First Hawaiian Inc Earnings Call
Okay.
Good day, Thank you for standing by welcome to the first Hawaiian Inc. Q1, 2022 earnings conference call.
This time, all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press on your telephone.
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I would now like to hand, the conference over to your host Sidney.
Yeah.
<unk> Investor Relations manager.
Thank you Justin and thank you everyone for joining us as we review our financial results for the first quarter of 2022.
With me today are Bob Harrison, Chairman, President and CEO , Ralph Mesick, Chief risk and Ralph Mesick, Chief risk officer, and interim CFO .
We have prepared a slide presentation that will be referred to in our remarks today. The presentation is available for downloading and viewing on our website at <unk> Dot com in the Investor Relations section.
During today's call, we will be making forward looking statements. So please refer to slide one of our seats for our safe Harbor statement.
We may also discuss certain non-GAAP financial measures. The appendix to this presentation contains reconciliations of these non-GAAP financial measurements to the most directly comparable GAAP measurements and.
And now I'll turn the call over to Bob Thank.
Thank you Kevin happier to everyone.
But I'd say that the outlook for the Hawaii economy is improving as COVID-19 becomes less disruptive.
Covid related restrictions for domestic coverage vendors and the states into a mass mandates has been lifted.
So our local economists and travel industry leaders are predicting very strong visitor arrivals this summer.
And as well as the return of Japanese visitors with the recent easing of travel restrictions.
Turning to the first quarter, our results benefited from our asset sensitive balance sheet and the balance sheet actions, we took in the fourth quarter net.
Net income net interest.
<unk> expanded.
Our liquidity position and capital levels remained strong.
Our credit quality is excellent.
Turning to slide two we had a nice quarter to start the year reporting income of $57 7 million.
<unk> per share of <unk> 45.
And our return on average tangible common equity of 15, 8%.
The board has maintained the dividend of <unk> 26 for the quarter.
We have some nice deposit growth in the quarter and saw improvement in our NIM.
Asset quality was excellent and we recorded a reserve release of $5 7 million.
Risk based capital levels are strong and improved over the quarter.
Common equity tier one increased to $12 two 7%.
As Ralph will expand on the balance sheet is well positioned for rising rate environment.
Thanks, Bob turning to slide three we ended the quarter with the liquid asset sensitive balance sheet.
And high levels of capital.
Deposit inflows continue with actions, we took in the fourth quarter to deploy excess cash we will retire at the Chelsea borrowings contributed to an improvement.
Our net interest margin.
Loan to deposit level was just under 58% quarter.
Higher rates led to a OCI adjustments and the security book, reducing the size of the balance sheet and GAAP equity reported.
It is important to note that the OCI adjustments do not impact income or cash flows and no impact on regulatory capital ratios or our ability to distribute capital to shareholders.
Turning to slide four.
Period end loans and leases.
Were $12 9 billion, a decrease of $70 million from the end of Q4.
Excluding the impact of PPP loans total loans increased about $40 million or one 3% on an annualized basis.
Growth in loans was driven by increases in CRE residential and home equity for this production was offset by unanticipated repayments in.
In the quarter, we saw a few construction loans refinanced prior to stabilization and more aggressive lending in the local marketplace with competition and relaxing not just pricing underwriting as well.
Dealer flooring balances remained relatively stable increasing about $9 million in the quarter.
This increase was lower than expected inspired demand and the lack of new vehicle production.
Manufacturing dealers building inventory.
Higher rates will impact mortgage refinancing activities.
Turnover should slow in support portfolio balances.
At quarter end the loan pipeline was strong we start with the first few weeks of the second quarter with good origination activity and growth in the portfolio.
The outlook for 2022 is unchanged with year over year growth in the mid to high single digit range expected.
Factors that account for the variability of the forecast include a degree of recovery, we see in dealer flooring.
Decisions, we might make to retain them or sell mortgage production and lastly, our risk appetite relative to changes in market lending practices.
Turning to slide five.
Deposits increased two 1% a $454 million.
With $22 3 billion at quarter end.
Consumer and commercial loan deposits drove that growth increasing about $421 million.
The cost of deposits fell by one basis point to five basis points.
Despite greater uncertainty around deposit levels, we do retain adequate flexibility to fund.
Under different scenarios.
Our expectation is that deposit betas will be like previous cycles, some lagging repricing against loans.
Turning to slide six.
Net issued net interest income was down $3 5 million from the prior quarter to $133 $9 million.
The decline was due to $6 8 million dollar trial.
And PPP loan fee and interest <unk>.
Building, the PPP fees and interest net interest income increased by about $3 $2 million.
The net interest margin increased four basis points to 42%.
As mentioned this was in large part due to actions we took in the fourth quarter to reduce excess liquidity.
Positive impact from lower average cash balances and higher security yields were partially offset by lower PPP fees and interest income.
Looking ahead, we are positioned to benefit from higher rates.
At the current level of interest rates. The net interest margin should increase a few basis points in Q2.
Seeing a 5% to six basis point benefit from the March rate hike offsetting the decline in PPP fees and interest you.
You should also see a pickup coming from higher yields on securities globe over and new loan originations.
Additional fed rate increases will be additive to this and we should see the impact quickly is about $5 billion in loans repriced within 90 days.
Turning to slide seven.
Noninterest income was $41 4 million essentially flat to the prior quarter.
Fees were down $1 4 million on a seasonal decline in activity, but the numbers are up year over year.
We reported a net decline of roughly $3 3 million in Bali due to volatility in the bond and equity markets.
Service charges and fees showed improvements over the prior quarter Trust and investment fees were flat.
Looking ahead, we would anticipate service charges and transaction based fees.
Higher Ed.
Economic activity picks up.
<unk> should also improve as higher rates will allow us to receive fees on cash management accounts.
Noninterest expense was $104 million in Q1, $4 $7 million lower than the prior quarter.
While we see why we will see inflationary pressures our outlook for the expenses is unchanged and we project full year growth of six 5% to 7% over 2021.
Turning to slide eight.
I'll make a few comments on credit.
Asset quality remained very strong realized credit costs were down and the level of NPA is criticized assets pass through loans per month.
In Q1, net charge offs were $2 6 million or eight basis points annualized.
This is $3 $6 million, Florida in Q4.
The bank recorded a $5 7 million provision release for the quarter.
90 day past due loans remained low at 10 basis points, one basis point lower than the prior quarter critics.
Criticized assets continued to decline.
Dropping from one 6% of total loans in Q4 to $1 two 9% in Q1.
Past due loans were flat compared to the prior quarter loans.
Loans 30 to 89 days past due remain at 23 basis points at the end of Q1.
Moving to slide nine.
You see a roll forward of the loans for the quarter by disclosure statements.
Economic outlook moderately improved in Q1, where we continue to consider downside risks that could impact credit losses.
Through such things as inflation, the reversal of fed easing at higher interest rates and impacts related to geopolitical instability and military conflict.
The allowance for credit loss decreased $7 million to $150 million 3 million.
The level of equated to $1, one seven of all loans or one 1% net of PPP loans.
The decrease in ACL level is due to the release of the COVID-19 overlay onto residential portfolio and improvement still conservative economic outlook and better asset quality.
Our reserve for unfunded commitments decreased by $1 $4 million to $29 million.
I will turn the call back to Bob <unk> for any closing remarks, thanks, Ralph So close the U S economy continues to show strength in Hawaii is expected to see good visitor numbers this summer that.
That will be helped by the likely return of Japanese visitors.
All of this will be positive for the local economy.
While we're paying attention to a number of external factors that create some uncertainties.
<unk> is in a good position to deal with any contingencies that come up and Moreover, we should benefit as rates normalize and local business activity rebounds.
Now I'll be happy to answer any questions.
Okay.
Thank you as a reminder to ask a question will need to press star one on your telephone.
All your question.
Please standby, we compile the Q&A roster.
And our first question is going to come from Abraham.
Oh, No Wala from Bank of America. Your line is now open.
Hey, guys good morning.
Alright.
I guess one man you wanted to just go back to the commentary on loan growth. So I guess, you still expect mid single digit growth.
But talk to us about.
About you mentioned.
Competition is picking up an unanticipated repayments just to give us a sense evolve in terms of what's happening in the market or the new engines, which are not local who entered the market, which because you made it anymore.
And just.
Is that causing you to lose more deals given what you mentioned around underwriting standards as well so we'd love to get some color around the competitive landscape.
This is Bob let me start and then.
Relative to comment.
First as we've talked about the mid to high single digit loan growth is really going to be initially driven by the mainland growth.
We're seeing that is very robust we had a relatively slow first quarter due to some payoffs, but we see a very robust pipeline there a lot of different areas.
Locally the comments throughout the bid or we are seeing people being more aggressive in the past that has been here locally.
Primarily by.
Pricing, but now we're starting to see some relaxation of terms and we're just going to hold permit that area.
We'll see how that plays out.
On the dealer side, that's also a big swing for US we're still watching that carefully moved up slightly over the quarter, but it's really hard to predict when global supply chains are going to be able to keep up with the demand that's out there.
Anything you'd like to know I would say, there's a lot of liquidity in the local marketplace.
We are sort of I think seen things that we typically see at the end of the cycle. So we'll just have to be disciplined and continue to look for opportunities.
And then just on the dealer finance like Oh.
Got it.
Things getting better or did no more mid tier two so there's another setback just give us a bit.
Those balances are today versus pre pandemic levels.
Relative to peak endemic Kevin I think were down six over $600 million still so dramatic we ended the quarter to $2 25, I believe redbox.
<unk> was down dramatically from pre pandemic.
A number of factors.
<unk> 36 to $2 36, yes, it was where we ended the quarter of all of our dealer flooring balances. So demand is clearly up people have a good amount of cash whether through money they save the cobot or government programs and so car buying is.
The hot item right now as it is just keeping up with that demand has been the challenge for the manufacturers.
Very good for the dealer community from a credit perspective, but yes.
They are having trouble getting the inventory that roadmap.
Got it and just one last if I may around.
In terms of the outlook for deposit growth, how youre seeing that play out in light of the fed actions that we expect.
Do you expect net net deposit outflows deposit.
Question around deposit betas, but appreciate any color.
Yes, we do.
Don't have a very specific view in terms of what were happening on deposits.
Pretty good inflows at the end of the quarter.
But where we are.
Paired for just a number of different scenarios, including the scenario, where we start to see deposit balances run off.
And in terms of repricing I think.
We continue to think that we will look very similar to the last rate cycle, where we may be able to sort of avoid.
Any kind of significant repricing for the first couple of hikes, but I guess a lot of that is going to depend on how quickly the fed hikes as well right.
Thanks for taking my questions.
Thank you and our next question comes from Steve.
Steven Meisel, Poland from Jpmorgan. Your line is now open.
Hi, everyone.
I wanted to start out on the C&I loan growth.
You know when we look at other regional banks that have a balance sheet composition very similar to you guys, they're reporting very strong.
C&I loan growth talking about line utilization improving and on slide four this decline in C&I ex PPP is standing out like a sore thumb can you just talk through why you are not also seeing a rebound this quarter and C&I.
Well, let me start this is Bob.
Haven't seen the line usage go up yet, we're still seeing really strong liquidity amongst our customers and so we really haven't seen the line usage go up also and that is no.
Dealer floor plan is.
C&I number so that's another reason why we haven't seen it really moves, but Ralph any comments you'd like to know.
No.
Scenario.
Local economy is going to be a little bit slower.
Then what youre seeing in the mainland.
Okay, Yeah, because dealer helped this quarter right it wasn't a drag.
Okay.
So where you are getting growth right, it's been resi mortgage and home equity, but now with mortgage rates moving up.
Whats the outlook there do you expect to see similar growth and when we think about the full year or how should we think about what's going to drive loan growth overall.
Overall.
Yes for loan growth I think what we're going to see primarily is in the CRE.
The first step.
Residential.
Really strong CRE activity.
The residential home equity is going to slow down obviously with the refinance thats going to slowdown dramatically, but we are seeing new new home buying so between residential and then we've seen a pretty strong first quarter origination from home equity that we're at.
Candidly in the process of closing out although it will happen in the second quarter, but people are moving out of refinancing their home is taken out equity didn't really moving into the.
Yes.
The home equity market, but we will see more of that build in the second half of the year.
Okay.
And then Bob on that construction line.
Optically it just looks like loans are flipping from construction to term Cree.
Would you expect that drag to persist throughout the year like strong commercial real estate, but on the other side of a construction balances just trend lower.
Yes.
Steve This is Rob I think the nature of the construction book, that's always going to be somewhat.
Post it turns.
I think on the larger deals institutional.
Type real estate, we do anticipate sort of a mini perm component, but we haven't been seeing that as much. So I think what we're seeing in that portfolio.
More term.
Which is essentially sort of means we're really putting a lot more effort into putting new loans on the books that sort of late.
Okay.
No stabilization period, essentially of institutional lenders or come in right at the end of construction taking them.
Okay. That's helpful. And then final question, when we balance and the asset sensitivity with the expense guidance.
I think you'll be able to deliver positive operating leverage this year.
Thanks.
Yes, I think I think what we're looking at right now is even with some pressure on expense I think we're going to get a really good.
Lift from the rate outlook.
Terms of the impact of the bank.
So I rarely.
Relative to where we were at at the end of the.
End of the fourth quarter I think we're looking at probably yes.
A bit of a lift.
I mean this year got it yeah. So the efficiency ratio you think trends down through the year that's fine.
Well.
I'd be reluctant to sort of necessarily say that but like I said I think we're going to grow we're going to we're going to do better than what we had anticipated.
At the end of Q4, just given with.
Direction of rates.
And the increases that we're looking at today.
You had budgeted.
Got it okay. Thanks for taking my questions.
Okay.
And thank you.
And our next question comes.
David Feaster from Raymond James.
Your line is now.
Good morning, everybody.
David.
Just wanted to touch on some of the puts and takes on the fee income line. No Bowl is obviously under pressure from the market a little bit like noted.
Some seasonality on card fees. Other income was also a bit weaker but just curious on your thoughts on these items, whether you could quantify the impact to kind of get a good baseline going forward and then just following up on your commentary on retaining versus selling mortgage production just curious.
Our thinking about that as well as as we look forward.
Yes, Steve.
Got it.
This is Ralph.
When we when we're thinking about the bully.
That was a big impact this quarter I think typically we're seeing something between 3% and $4 million in fully income.
Again, I would note that on the <unk> side that is an asset that is basically sort of hedging a liability. So to a certain extent you have you have offset when you see changes in that account, but if we start with a $41 million and I think we had.
Did you two and <unk> 48, as kind of a run rate.
Add back three $3 million there. So that's about $4 million, we're looking at probably a couple million in increased relative to card and debit fees I think as we go through the year.
When we look at the wealth wealth line as interest rates start to increase we're going to start to be able to collect fees on cash management accounts, which we haven't been able to do.
During the past few years, given the level of rates. So that's going to be a pretty nice lift for us and then when we look at that business as well as the wealth business. We had moved from a commission based model to an AUM model. So I think even to the extent that we see some.
<unk> there on the equity side I think we're going to we're going to see.
Enrollment netlist.
We're still pretty confident that we can get to that number.
And again I think when we look at any kind of service charge for activity related sort of.
I think we're going to see some lift as we go through the year.
Economy here really starts to pick up a lot of demand and I think for people to come in coming into the state and I think we're going to have some.
You know a very strong summer.
Yes.
You'd also asked about residential connection I believe so yes.
We're still retaining most all of that but something we're looking at.
We've seen a little bit of mix change where people are coming in for arms, which would you'd like to retain versus 30 year fixed. So we haven't made any final decisions on that yet, but we're certainly looking at it closely.
Okay.
And maybe just touching on credit more broadly you know asset quality remains strong we've got a conservative approach to credit you are in your commentary.
Excuse me it sounds like you're still a bit cautious on the economy and just in light of some of the.
The competitive dynamics on a more aggressive terms.
Just curious how willing you how willing are you to compete on term in order to drive growth and then just on the overall broader credit front.
What keeps you cautious.
What keeps you up at night, what are you watching closely as you're managing credit.
Just curious any thoughts on that.
Sure Great question.
Yes.
As we look at it we don't feel we're overly cautious on credit we have very strong credit quality and we're really looking for good opportunities that we can earn a return on capital.
If the pricing doesn't whereas the risk out there we're we're disciplined enough.
So I'll hold off a bit and looking at other areas. We're seeing very strong opportunities that are well structured and well priced in the mainland right now and we think that that will continue to evolve and come over here at some point, but yes little bit of irrationality out there at the moment.
That nevertheless, very well so we're just going to be patient and make sure that we're putting our capital to work that we're going to get a fair return for that.
Okay.
And then maybe just touching on capital here too.
In light of the OCI impact of asset book, Obviously regulatory capital is very strong in your prepared remarks talked about really has no impact on your ability to distribute capital, but you know I'm just curious how you're thinking about the buyback year in light of the decline in the TCE ratio do you still expect to remain active in.
Just any thoughts on overall capital.
Yes.
Not that we don't pay attention to the TCE ratio, but we're really focused on common equity tier one.
We didn't repurchase any stock in the first quarter as we've talked about a little bit on the.
The year end call was we see a pretty robust outlook for growth of the loan book and we want to make sure that we other capital and be able to support that growth before we go after the share repurchase just intra.
Interesting point, we did a look back since we went public.
We returned 82% of our earnings to shareholders either of two thirds of it in dividends in the third and share repurchase. So we're strong believers in capital return.
We're looking to do that we just want to position ourselves not to be restricted our ability to grow the loan book.
Understood. Thank you.
Okay.
And thank you.
It should.
Comes from Andrew Liesch Piper Sandler Your line is now open.
Hi, good morning, everyone.
Just curious if you can provide a quick update on the state of the core conversion is that still on track any sort of news you can share there would be great.
Yes, no great question.
Quite frankly taken a lot of our time glad you asked.
That's still on track for this quarter, we've already sent us a notice to our customers and that will be happening next month.
We're very excited.
Great and then sorry.
Sorry, if I missed it but the other noninterest income line down to about $900000 from I think it was close to it.
Well I think there's some onetime items in the fourth quarter, but curious where that line should be trending. It just seems like that was undersized relative to other other quarters that were mortgage gains or I'm. Just curious what drove that drove that number yes.
Yes, Andrew this is Ralph.
Probably about a million seven I think delta.
Relative to mortgage mortgage income.
So that was I think a pretty big driver there.
We saw a little bit less in swap fee income than we would've been.
We had anticipated this quarter, so that was probably a little bit related to the timing of a few key deals that got pushed into the second quarter.
So I think that's probably the.
Primarily the delta on that line item.
Got it.
Have covered all the other questions I had I will step back thanks.
Thanks.
Thank you.
And our next question comes from Kelly Motta from <unk>. Your line is now open.
Hi, good morning, Thanks for the question good.
Morning.
So I hate to beat a dead horse, but just circling back to loan growth your guidance implies an acceleration from here with the <unk>.
Mid to high single digits, how much of where you fall into that is related to dealer floorplan dealer Floorplan doesn't materialize. The way you hope do you still see them.
That other areas can get you to at least the low end of that guidance for the year.
Sure Great question, Kelly, we're still feeling that on that guidance.
The low end is without a strong.
Recovery in dealer floor plan and the <unk>.
High end is really that's dealer floor plan comes back more strongly.
At least today it looks like but it's really hard to predict where that's going to land.
So the bottom end of the range is essentially without the dealer floor plan.
Got it.
That's helpful and then just on on the mortgage outlook.
Obviously refi is slowing.
I was hoping you could just provide a bit more color and detail on the purchase market and ROTC rosy mortgage triangles and demand on Hawaii.
And what I'm trying.
Kind of gives you confidence in the outlook.
Continuing to grow.
Yes.
Like many market certainly here in the West coast.
Is very strong.
<unk> for for housing.
Things that are coming on market or selling very quickly.
Generally higher prices of before and everybody gets caught up in the headlines.
Neighbor Island large.
Waterfront properties, but just broadly within the markets here in Hawaii. There is still very strong demand that essentially every price point for residential solar.
We won't see the same refinance activity anything that comes on the market Youre seeing good competition for that so that will be coming on during the year.
The large projects, we've talked about in the past, Okay Lee Koa Ridge.
Talking to those developers are accelerating their plans because it's such a strong market.
So as soon as they can get the analysis completed given all of that.
Directions with supply chains, they're getting into the market because there's a very strong demand for pretty much anything in residential or condo right now.
Got it. Thank you. Thanks, so much Bob that's really helpful. And then just one last Nit picky question.
Thank you gave it but I didn't catch it on the bully income.
It is about 3 million the right run rate on a go forward basis kind of similar to last quarter.
Yes, Kelly that that would be I think.
As things stabilize that would probably be the number that's sort of where we would see.
Over the coming years.
And again.
Yes.
Thank you I'll step back.
Thank you.
And our next question comes from Jared Shaw from Wells Fargo Securities. Your line is now open.
Hey, everybody.
Thanks, a lot.
I guess first on the margin on the net interest margin you talked about the 5% to six basis point benefit from this rate hike should.
Should we expect.
That's sort of the sensitivity as we go forward or.
How should how should we be thinking about your future rate hikes through the course of this year.
That's a similar magnitude.
Yes.
Jared This is Ralph I would say that the five to six kind of gives you a kind of indication of what happened. This last time, so that I mean there.
There are things that could sort of influenced that depending on what happens with <unk>.
On the deposit side, but I think that's a pretty good number and then.
As we mentioned we have about $5 billion.
Floating rate debt will reprice.
With a hike that's probably another another delta that you can take a look at there.
And generally as we have sort of securities.
Roll off we're seeing better yields.
And then on the new loan origination activity fixed rate type of lending.
Net debt as well.
Let's see.
Pick up there as well.
Okay. Thanks, and then on the Securities book can you give us an update on what the cash flow is looking like sort of I guess monthly there and what securities purchases were in the quarter and where you are buying today.
Yeah, I don't know that I have the specific number on the securities purchases.
In terms of.
The top of my head, but.
I think we are still seeing around $100 million to $125 million.
Monthly run off.
And then looking at the Securities New production.
<unk> Bob.
211 basis points.
So that compares to I think.
Last quarter was around 160 basis points pretty nice lift there.
Okay, and then just finally.
Sorry, Jeremy this is Bob relative to the portfolio just done a very good job structure in it we haven't seen as you saw on the.
The slides that extension.
So it's really.
Behaving exactly as we had hoped.
The same duration, let's say steady cash flows coming off of it.
Okay, great. Thanks, and then just finally on the loan side.
Was all of the residential growth from your own origination or was some of that purchased and then on the shared.
CRE side is what portion of shared national credits or a participation.
So so I think with regard to that I don't have the numbers relative to wholesale versus.
Production on the on the CRE side, I would say, it's still pretty much a balance between.
The deals that were purchasing on the mainland and then.
Activity that we're seeing here.
And again, we had.
I should mention that we did have some pretty large pay downs this quarter.
The local market, which kind of impacted that.
Growth in.
Hawaii based CRE.
Okay.
Okay. Thank you.
Yes.
Yeah.
And thank you.
And again, if you would like to ask a question that is star one again, if you'd like to ask a question.
It is star one and our next question comes from Laurie Hunsicker from Compass point.
Your line is now open.
Great Hi, Thanks, good morning.
Yes, just going just going back to where we're Jared was chatting on rates I just wanted to make sure that I have this right.
The P. P P in the quarter I'm just backing into this PPP forgiveness gains or about $2 $5 million is that correct.
Yes.
Okay, and then and so that leaves you about two and a half million dollars.
So remaining and unamortized dance or is there a better number on that.
No it's about $2 1 million.
Unamortized fees.
Okay, Great and then you had made comments that.
NIM for Q2, it might be three basis points higher just because of the offset with with the P. P. P. But the PPP probably is going to.
And then close to close to the current quarter. So I just wanted to make sure that I heard that right is there something else that is pulling you off of what we weren't otherwise D. A six basis point up.
Or how should we be thinking about that.
Hello. This is Bob maybe I'll start and hand, it off to Rob what were seeing is the bulk of the PPP has been done and now it's really starting to slow down on the forgiveness. So the $100 million that's left relative roughly top.
Balances, we expect that to be a slower forgiveness it might even turn out so.
And so forth. So we're not expecting to see the same level of forgiveness, we saw in Q1.
Got it okay. So most of that to $2 1 million bleeds over the full year, you're not going to expect to see a lot of that necessarily next quarter.
It would be much slower, it's not going to be okay.
$4 million, we saw in this quarter.
Got it Okay, and then just very high level of asset sensitivity can you give us a refresh on where you are looking.
Looking at sort of an up 100 basis point shock then you're incredibly asset sensitive as of December 31st two are positive 11, 8% and we all know your deposit base is absolutely gorgeous going back to pre pandemic right not just where we are currently so can you help us think about that because it seems to me like the five to six basis point.
Round number guide for every 25 basis points might be a little light or maybe ive, just extrapolated that wrong.
Yeah again this is Ralph that the models are really more for risk management purposes, but I think when you look at the 100 basis point last quarter looking about 11 eight.
This quarter about $9 eight so about 200 basis points.
8%, Okay, great, Okay, and did I extrapolate that right from your comments you are roughly expecting five to six basis points on margin for every 25 basis point hike.
No I don't think we gave gave that either.
We did this last quarter sort of what asset so as we did this last quarter Laurie and we think Thats representative provide but overtime there will be some pressure on deposit rates obviously.
Sure. Okay. That's super helpful. Okay, and then just to go I think Kelly and Andrew both where we're hitting on noninterest income just wanted to go back what is what is your exact swap income number for this quarter and what what was that last.
Let's see.
Maybe while you're talking not just very high level to your other other noninterest income line has been running.
And at $3, three $3 5 million or so per quarter. It was only 900000, obviously this quarter I mean does that normalize back to that level or.
These are under pressure, we're going to see that track closer to $2 million in how how should we be thinking about that theres a lot of things in that number I guess that we arent brevity, two I know the fourth quarter.
I think your $6 million visa loss, so, but even netting that out that was three point something for $8 2 million. So do we see a return to that or how should we be thinking about that.
Yeah.
Coming back to that so the swap fee income this quarter was about $962 million and 162000.
$1000 and typically we would probably hope to see may be modest.
Between a million and a 1 million and a half and much much more.
Kind of a larger deal so its a little bit of a lumpy.
Item.
Okay.
Half a million in Q4.
And then I think I think as far as the number is concerned you know can we get back up to the other line item.
We think we can but really what we look at across a lot of the different line items I think we're feeling pretty good about the transaction related fees.
And we think that the trust trusting cuts going to hold up and actually if we get back to more normalized levels on our cash management accounts that that could add another $4 million in ERP.
Another $4 million annually.
Yes.
Yes.
Okay. That's great. Okay very helpful. And then can you just give us some color around overdraft NSF fees, how you're thinking about that going forward and just maybe even what was what was that number this quarter.
Gonna be any sort of consumer friendly relief in any sort of impact on your fee income with that.
Yes, Brian This is Bob that's something we're certainly looking at we don't breakout specific numbers separately, but that's something we're certainly looking at.
Ladies we're in the middle of our.
Core conversion, we're not looking to redesign products at this point in time, we really need to get through that.
Very much on the horizon and really looking to see how that plays out both nationally and locally but.
We think that the.
Services, many of our customers use and appreciate it.
And it's just interesting time policy.
The regulatory approach to it right now but.
We're looking at it and we'll just have to come back later.
Make some decisions that will show that a different time.
Okay and then just last question just quickly if you could comment a little bit on your unsecured consumer book it looks like.
I'm just getting this off your press release, if I'm looking at the number that's last 619 in unsecured consumer has become obviously such a hot button here.
Looks like it's about $113 million bucket, great quarters, giving your charge offs now are coming from consumer I'm, assuming most of it is from that book can you can you help us think a little bit about Europe .
Do you approach that going forward I mean, certainly your credit is very very pristine and so how are you thinking about unsecured consumer do you have any concerns there is that in fact, where your charge offs are coming from or any any color you can provide on that thanks.
Yes.
This is Ralph are you know, we're still at a pretty low level relative to charge offs that is a small book that.
That was it booked that in the past, we had maybe a more elevated levels of charge offs.
Probably the book also that we hold a higher level of reserve.
Thank you know in the last couple of years, we've been probably more.
I think.
Disciplined around underwriting and that exactly because of COVID-19 itself.
We're not really you don't expect them to have.
Losses in the book and then I think that the dealer portfolio continues to perform really well.
Past dues are very.
And to the extent that you take back the car.
You really recovering a lot.
A lot of.
Charge.
I think it would be indirect.
Yes.
Dealer to dealer floor plan.
Experience on that has been excellent.
That's where else around us on the consumer that's something we looked at several years ago made some changes we're seeing better performance, but it is a higher risk portfolio relatively small for us but higher.
Great. Thanks for taking my question.
And thank you.
I'm showing no further question I would now like to turn the call back over to Kevin coffee AMA for closing remarks.
Thanks, Justin we appreciate your interest there first of all Ryan and please feel free to contact me. If you have any additional question.
Thanks, again for joining us and have a good weekend.
This concludes today's conference call. Thank you for participating you may now disconnect.
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Yes.
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