Q1 2022 Bank of Hawaii Corp Earnings Call
Okay.
Ladies and gentlemen, thank you for standing by and walk to the Bank of Hawaii Corporation first quarter 2022 earnings call. At this time all participants are in a listen only mode there'll be a.
A question and answer session. After the prepared remarks, if you would like to ask a question. During this session. Please press star one if you require any further assistance. Please press star Zero I would now like to turn the call over to your host you know he gets you may begin.
Thank you Kevin and good morning, Good afternoon, everyone. Thank you for joining us today on the call with me. This morning is our chairman President and CEO Peter Ho.
Chief Financial Officer, and she gave Maura and our Chief risk Officer, Mary salary before we get started let me remind you that today's conference call will contain some forward looking statements and while we believe our assumptions are reasonable there are a variety of reasons. The actual results may differ materially from those projected.
During the call, we'll be referencing a slide presentation as well as the earnings release, a copy of the presentation entities are available on our website B O H dot com under Investor Relations and now I'd like to turn the call over to Peter Ho.
Thanks, Chanel low everyone. We appreciate your interest in bank of Hawaii.
First quarter was the was a good start to 2022 for the organization.
As is our custom I'll share with you some thoughts on the broader market here in the islands. I'll, then turn the call over to Dean to talk about the financials and then he'll turn the corner all over to Mary to give you some perspective on the credit side, and then I'll close with some concluding thoughts and then we'd be happy to take your questions. So beginning with.
The economy things appear to be shaping up stable and are improving is what I would call. It here you see our unemployment numbers unemployment now down to four 1% I think when you look at the forecast numbers out that new hero has put in there obviously I think clearly those are.
Do for adjustment and I think probably impacted by some of the changes of the of the Bureau of Labor statistics. So all in all I think a pretty good performance unemployment wise when you look at the some of the high frequency data that the University also puts out.
To call their economic pulse, which is an aggregation of a bunch of the high frequency data, you'll see that really that rating is up to its highest level ever.
<unk>.
In the new environment that we find ourselves in so as of the past couple of weeks that ratings hit 81 points to give you some frame of reference our prior peak was 75.
In the summer of 2020, just before Delta hit and then.
Those numbers took a dip with delta and that all mccraw, so nice to be back.
Up at a high and hopefully moving forward there.
Switching to real estate.
Here you see that are the real estate market at least here on Oahu. Our primary market continues to do quite well so price point still elevated at very high levels, both single family as well as condominium.
And also you see that the.
Our base of inventory or shortage of inventory.
Continues to be the case and not likely to see much change in that environment anytime soon and therefore, I wouldnt expect to see too much erosion in price point certainly not in 'twenty two.
Next slide.
Switching over to the visitor side.
This is really an evolving story.
Let's see and you can see in the chart that a 2022 levels are getting closer to 2019 levels were pre pandemic levels.
The numbers are from a rival stone point down still 25% from 2019, but that's sort of the tale of two marketplaces are U S arrivals, both east and West U S. Arrivals are up year to date, 8% from 2019, but all but clearly the.
Drag it was dragged down the entire market or the Japanese down, 98%, Canada down 61% and other international.
That places down 70% intra.
Interestingly when we look at spending patterns are the news isn't quite as as as bad they're spending is down and I remember I told you arrivals were down 25%, but spending is only down nine.
Nine 9%.
Year to date through February and this reflects a very robust U S. Consumer so U S spending our U S market spending in the islands year to date February is up 27% and offset somewhat by a Japan, Canada and other international.
Just to finish off on the visitor side.
Revpar performance, which as you can imagine has been quite difficult through the pandemic is really starting to look up so.
The last three months beginning of December Revpar. The state was actually a plus seven 6% versus 2019 levels of January was off slightly at minus one 3% versus 2019 and February bounced back nicely at plus 4% versus 2019.
So all in all what we see in the visitor segment is.
I have a reasonable performance given what's happening in the various marketplaces.
Good a fair amount of for case for optimism optimism as we look forward and hopefully welcome to Japanese visitors back hopefully towards the tail end of this year.
So that's it for my I Hope it is let me now turn the call over to Dean will share the financials David.
Thank you Peter.
Our strong core loan growth continued in the first quarter.
Loans net of P. P P waivers increased by $354 million or two 9% linked quarter and by.
By 1.1 billion year over year or nine 4%.
Growth was across both commercial and consumer loan portfolios at two 5% and three 2% respectively linked quarter.
P. P. P loan balances declined by $69 million and 58 million remained at the end of the quarter.
Net interest income in the first quarter was $125 3 million and included $1 8 million from P. P. P loans.
The fourth quarter net interest income included a one time reduction of 900000 for an adjustment to deferred mortgage loan fees and $5 7 million and P. P. P loan interest income.
Adjusting for the onetime charge in the fourth quarter and total P. P. P loans interest income in both quarters.
The first quarter's core net interest income was $123 4 million up $1 9 million or one 6% linked quarter.
Driven by strong loan growth and rising interest rates.
Our core net interest margin, which excludes PPP loan interest income increased by seven basis points linked quarter to $2 three 1%.
Our loan to deposit ratio remains low well below our regional and local peers.
This affords us a strong and stable base of low cost deposits that is a readily available source of liquidity to fund loan growth and provides pricing flexibility.
One of the driving factors of this strong deposit base is always unique deposit market and our strong position within this market.
According to FDIC deposit study data the top five banks make up nearly 97% of deposits in the state of Hawaii.
Bank of Hawaii, as well positioned as the market share leader with exceptional brand recognition and customer relationships.
The composition of our deposits further demonstrates the strength of our deposit franchise.
94% of deposits are from core commercial and consumer customers and the remaining 6% and public deposits are predominantly government operating accounts.
While analyzing when analyzing our deposit products, 96% of our deposits are in core savings and checking accounts with checking balances comprising nearly 60% of total deposits.
Our solid base of low cost deposits provides us with flexibility in a rising rate environment.
Total deposit balances increased $356 million or one 7% linked quarter and $392 million in core commercial and consumer customer accounts, while our deposit costs decreased by one basis point to five basis points in the quarter.
During the last rising rate period, we demonstrated pricing discipline at approximately 20% beta while continuing to grow deposit balances.
Our balance sheet remains asset sensitive to changes in interest rates and we will continue to benefit from higher rates.
The recent increases in medium and long term rates are already having a positive impact on our core net interest income and margin.
In the first quarter of 2022 net interest income was net income was $54 8 million and earnings per common share were $1.32.
Net interest income in the first quarter was $125 3 million.
As discussed earlier core net interest income, which excludes PPP loan interest income was $123 4 million up $1 9 million linked quarter, driven by strong core loan growth and rising interest rates.
As Mary will discuss later, we recorded a negative provision for credit losses of $5 $5 million this quarter.
Noninterest income totaled $43 6 million in the first quarter up 1 million from the fourth quarter.
The increase was primarily due to higher swap revenue and deposit fees.
Actually offset by seasonal decreases in service charges and other transaction fees.
Also included in the first quarter's noninterest income was a onetime negative adjustment of 400000.
For a change in the visa class B conversion ratio, which was reported as a contra revenue item.
In the investment securities gains and losses.
In addition, we recognized a 1.8 million recovery for MSR impairment in the mortgage banking income, which afforded us the flexibility to hold more in mortgage loans.
We expect noninterest income will be approximately $42 million to $43 million per quarter through the end of the year as mortgage banking income and asset management fees are expected to be lower due to higher interest rates and lower markets.
Noninterest expense in the first quarter totaled $103 9 million up from $101 7 million in the fourth quarter.
Included in the first quarters expenses were seasonal payroll tax and benefit expenses.
$3 7 million related to annual incentive payouts made during the quarter.
Included in the fourth quarter's expenses was a one time 1.2 million charge.
When additional employee benefits that increased our vacation carryover limits.
Adjusted for these items. The first quarter's expenses were $100 2 million down 300000 from the normalized fourth quarter expenses of $105 million.
Thus in the first quarter, we were able to maintain our overall expense discipline, while continuing with our innovation investments.
For the full year of 2022 expenses will be approximately $414 million to $415 million as inflation pressures have increased overall expenses.
The annual Merit increases in one time cost of living adjustment.
Which together totaled <unk>, 5% increase for employees began on input cost.
Our return on assets during the first quarter was <unk>, 97%. The return on common equity was 15 four 4%.
Our efficiency ratio was 60, 153%.
Our net interest margin in the first quarter was $2 three 4% unchanged from the fourth quarter.
Excluding total PPP loan interest income.
Core margin was 231% an increase of 7% seven basis points linked quarter.
The increase in the margin during the first quarter reflects the ongoing impact of strong core loan growth and rising rates.
Excluding the impact of PPP loan interest income, we expect continued improvement in our core margin with increases of five to six basis points per quarter for the remainder of 2022.
<unk> loan growth and higher interest rates. This is an improvement from the previous NIM guidance of three to five basis points per quarter.
Our capital level remains strong and is well positioned to support continued growth.
Our CET, one and total capital ratios were 11.83%.
14.41%, respectively, with a healthy excess above the regulatory minimum well capitalized requirements.
Higher interest rates negatively impacted the valuation of our available for sale portfolio, resulting in an ear OCI adjustment the reduction in our book and tangible common equity.
However, this had no impact on our regulatory capital and our capital distribution capabilities.
During the first quarter, we paid out $28 million or 53% of net income available to common shareholders in dividends.
$2 million and preferred stock dividends.
We repurchased 117000 shares of common stock for a total of $10 million.
And finally, our board declared a dividend of <unk> 70 per common share for the second quarter of 2022.
Now I'll turn the call over to Mary Thank you Deane.
Credit performance remained very strong in the first quarter net loan and lease charge offs were $1 5 million or five basis points of that bridge loans and leases annualize this compared with two basis points in the fourth quarter of 'twenty, one and 10 basis points in the first quarter of last year nonperforming assets totaled $20 million or 16 basis claim.
<unk>.
One basis point for both the linked period and year over year, all nonperforming assets are secured with real estate with a weighted average loan to value of 50%.
Loans delinquent 30 days or more remained stable at $28 3 million or 23 basis points.
Well it was down $11 6 million or 10 basis points year over year.
And criticized exposure was down to just one 6% of total loans driven by continued improvement in the financial performance of those customers who had been most impacted by Covid.
The quality of our loan production in the first quarter was strong and reflective of our continued conservative and consistent approach to underwriting.
For the quarter, 62% of commercial production was secured with quality real estate modestly leverage our commercial mortgage production had a weighted average loan to value of 60% and construction production had a weighted average loan to value of 65%.
83% up the quarters consumer product chip are secured with real estate again conservatively leveraged residential mortgage and home equity production had weighted average loan to values and combined weighted average loan to values of 62 and 58% respectively.
79% of home equity production less impressively.
FICO scores for all our consumer production remains very strong and consistent imports.
Importantly, when we look at the bottom quartile of our loan production, we continue to see solid credit metrics.
As Tim noted, we recorded a negative provision for credit losses of $5 5 million. This quarter. This included a negative provision to the allowance for credit losses.
$4 3 million, which with net charge offs reduced our allowance to $152 million or one point to 1% of total loans and leases or 1% to 2% net of PPP balances.
The decrease in the allowance reflects the improving economic outlook and forecast for our market coupled with our credit risk profile, while continuing to provide for the uncertainty and potential downside risk associated with recent geopolitical events and tighter monetary policy the reserve for unfunded credit commitments was five.
$2 million at the end of the quarter down 800000 for the linked period I'll now turn the call back to Peter.
Thanks Barry.
To conclude I just.
Little.
A few thoughts on where we see ourselves moving forward.
We believe we are extremely well positioned for what we see is a evolving environment. We're asset sensitive as Dean mentioned, we operate in an interesting deposit marketplace, where the top five local.
Globally headquartered players represent 97% of the market I think equally interesting about five is that the weighted average loan to deposit ratio of those participants to 61%.
Bank of Hawaii, as a terrific position within this market place.
From a credit standpoint, we're as Mary described in very good position as well.
High quality securities portfolio, and our loan portfolio is well diversified well balanced and has a 79% collateral position with a weighted average loan to value of 56%.
97% of our loans are in markets. We know we've known for decades and our current strategy ensures as continued familiarity.
Finally from a liquidity standpoint, as Dean mentioned, our deposit base is incredibly core in nature, with 94% consumer and commercial and 96% being either demand or savings.
As Dan also mentioned, we have historically market, leading deposit betas, which we would anticipate deploying through the cycle.
And our operating model generates the highest returns of capital in the industry.
So that we're happy to take your questions.
Ladies and gentlemen, if you have a question or comment at this time. Please press. The Star then the one key on your Touchtone telephone. If your question has been answered or you wish to move yourself from the queue. Please press the pound.
Our first question comes from Jeffrey <unk> with D. A Davidson.
Thanks, Good morning.
Hey, Jeff.
On the buyback just want to check in on the appetite.
It was up linked quarter, but but it's been higher in the past, but just interested in you know.
The OCI.
Consideration or just general macro.
Kind of give us an update of where you think on.
On buybacks.
Yeah.
It is up about.
About 3 million quarter over quarter, we continue to.
Implement our capital plan, which generally will.
Capital for.
Growth and then our dividend and of course, what's remaining is the.
Available for share repurchases, we continue to believe that Oh.
Important part of our capital.
Plan.
And going forward I think it will depend on how the.
Environment evolves.
Given the volatility in the rate environment.
We will continue to repurchase shares, but it could change depending on the outlook.
Yeah. So I think our I think our intent is to continue with repurchase probably similar to what you've seen in the most recent quarter.
Obviously subject, Jeff to what's happening in the rate environment, you would understand.
Sure Yes.
Thanks and.
Peter you mentioned.
And it looks like the you hear a forecaster.
Lagging real time.
And maybe a question for Barry just on that.
Okay.
Does the first quarter.
Provision recapture sort of baked in.
As of March end.
In other words, if we've seen some economic improvement is can we.
Can I assume that that would be reflected in the second quarter.
<unk> consideration.
In other words exactly Jeff.
I play.
Okay got.
Got it.
And last one maybe Peter just trying to circle back to the <unk>.
England behavior on for the last rate cycle, how both loans and deposits.
Talked about the uniqueness of <unk>.
The local participants on the deposit side. My guess is last upgrade cycle deposit betas were lower.
But if you could just touch on both how loan pricing loan and deposit pricing.
Played out in the last cycle.
Yeah, I would I would say that.
On the deposit front was.
It was pretty stable I mean.
So I think we had about a 20% deposit beta we did we didn't have the best betas in the marketplace.
So there's a good amount of stability I'd say.
On the deposit front in part and the reason one of the reasons why I mentioned the loan to deposit the weighted loan to deposit ratio for the top five is.
There's always been a bit of a mismatch between funding and assets in the islands and I think that's in part how you get those betas right.
So as we look forward Jeff.
You know.
Interestingly the liquidity dynamics of the marketplace are not a lot different than the last cycle. So then therefore I wouldn't anticipate much to change on the deposit front on the loan front.
You know like.
Like I said it.
As always been a funding heavy asset lighter environment, there's always going to be competition, there, but you know with rates rising that'll be kind of interesting to see kind of where people position because.
It's really the yield or the income side has really been very volume driven to date through the past call. It 10 years 510 years, but as margins are picking up I think maybe people will be more sanguine sanguine just to kind of pick up on the rate side versus the volume side, we'll see though.
Okay I appreciate it thank you.
Our next question comes from Andrew Liesch with Piper Sandler.
Hey, good morning, everyone.
Just questions on the on the loan growth continues to be really strong. It sounds like you retained more on the mortgage side.
May have driven that but.
Is there anything you can point to what's going on in your market or or maybe at your with your bankers and lenders specifically that's driving this.
Given how strong that it has been for several quarters now.
Yeah sure so well first of all we saw growth in just about every category, both consumer and commercial C&I.
C&I was a bit flattish.
But three was up three 4%.
Construction was up 12, 7%.
So clearly on the commercial side I think we're the beneficiary of a healing economy.
Increased activity is as people are.
We're generally a lot better capitalized than you might imagine coming out of a pandemic.
And then having a consistency of team.
For many many years that just allowed us to one ensure that we've got quality.
Staff out there in the marketplace, taking care of clients and then to having staff that's been you know.
Managing the same clients for an awful long time, and so as opportunity begins to peak its head out execution becomes that much more possible.
On the consumer side, yes, I think we probably held onto a little bit more.
<unk> mortgage production.
Just as kind of I think the fee side was not quite as attractive as is as earlier quarters, but in general I'd say that you know resi was up home equity was up indirect was up.
Even even indirect with the inventory challenges of the marketplace and there is a combination of.
I think really great programming.
We're really starting to see traction on our marketing front, we're seeing great traction on R.
Our channel diversification side, a good movement into our simplify online platform. So really kind of a combination of things thats helped to deliver that that I'll come Andrew.
Okay. That's great color and then how our pipeline is shaping up so far this quarter I know, it's still early but how are things trending now.
Yeah, I mean, we have a monthly pipeline meeting with with the entire <unk>.
Consumer and commercial team.
Always much anticipated.
And I'd say, you know Q2 looks pretty good again, I mean, you never know I mean, it's a pretty volatile.
Geopolitical environment, we find ourselves in but for now we're feeling pretty good about growth I don't know, if we're going to get 2.9% core because that's pretty.
That's getting pretty frothy.
But I think solid loan growth is definitely.
Definitely built into the pipeline as it stands right now.
Got it.
That's very helpful. Thanks for taking the questions here I'll step back.
Take care.
Our next question comes from Ebrahim, Pune wallet with Bank of America.
Hey, good morning.
Abraham I.
I guess, maybe one.
First on expenses.
I think Dean mentioned full year, $414 15 million, that's about 6% to 7% up year over year.
Just talk to us Peter as we look forward beyond this year are on the puts and takes I mean, it feels like inflationary.
Pressure will be higher than what we saw post financial crisis, that's going to have some upward push to the expenses give us a sense of where you're investing there. The bank and then from an investment spend perspective and areas of incremental cost savings to offset the growth yes.
Yeah. So yeah. That's that's really the question these days isn't it.
Maybe take a.
Take a slightly higher lens view of the situation. We're in the last five years.
If you look at our expense trend.
Our our invest investment expenditures have grown.
By about 11% just over 11% annually. So obviously, a big investment in the categories like technology or data analytics or marketing.
Or e-commerce , and those types of things.
The overall growth of expenses of the company has been 3%.
And so kind of those non strategic areas those areas other than what we deem to be investment in strategic has grown at a 0.9% clip. So we've been able to accommodate the investments that we think we need to do clearly the world's changing and clearly consumers are changing.
And who's paid for that is in fact.
Every other expenditure.
So as we move forward the challenges, we do see a more inflationary environment. Obviously I don't think we can keep kind of other expenses kind of the rest of the company at 1% call. It that's got to go up but I think what will happen to Abraham is clearly about 11%. It was not an intended sustainable CAGR I mean.
That number is going to come down meaningfully and so I think where we're going to land out as kind of a <unk>.
The 4% ish kind of annual growth rate that as you know for bank of Hawaii as a little bit on the high end, but I think we're just in a different inflationary environment than we have been previously and Theres still some investment spend to be made but I'll tell you a good portion of that is already built into our expense bloodstream and so a lot of the kind.
Pre work, but you got to do to get these platforms, whether it's marketing or e-commerce going it takes a lot of upfront expense.
But it's like a 4% ish core expense growth is the right way to think about that that was helpful. Thanks Peter.
And I think you mentioned.
Dean about.
Five to six basis points, you spoke waterflood the rest of the year.
And you will provide us some color on just deposit dynamics, but.
On the deposit front like as you think about <unk>.
Maybe some of the.
Non core compare it does get more competitive on pricing do you see any subset of your deposit balances, leaving the bank machine head and he might be more sensitive so maybe theyre going to money market or market related kind of funds, where they can get a higher rate.
That's certainly a possibility and something that we continue to look at.
We are.
We do have.
As we manage our deposit base plans for alternatives also.
We do have a pretty significant trust area that can help us there.
The intent is to kind of maintain our customer base and deposit balances.
Got it and just one last question.
We look at the tangible the TCE to Ta the issue I think you mentioned.
Still going to do some modest buyback similar to <unk> levels and I realize that.
You'll see a impact as transitory, but many of them and when you look at the PC at five four.
Does that have any impact in terms of influencing capital management or he looked at.
<unk> is near term noise.
It's certainly something that we pay attention to we're not it's not maybe the highest.
Race.
Ratio that we look at we look at primarily the regulatory capital ratios.
And from that perspective, the OCI has it doesn't impact that.
So that's kind of.
What we look at if it if there is a significant change.
There could be some.
Different actions, but right now it's certainly just.
Regulatory capital ratios that are.
Top of mind.
Got it thanks for taking my questions.
Our question comes from Kelly Motta with K B W.
Hi, yes.
Good morning, Thanks for the question.
The first is just.
Uh huh.
New core NIM guidance of five to six basis points a quarter.
Just wanted a quick clarification if that was.
Incorporating the forward curve or any.
Rate assumptions going into that.
Uh huh.
It's not the entire curve it's.
Certainly expecting rates to rise.
But it's.
Slightly actually less than the forward curves would predict currently.
And it assumes about a two 5% fed funds rate and $2 85 on the 10 year.
Great. Thank.
Thank you so much and then turning to loan growth I mean across the board it was really really strong.
It looked like.
It came down a little bit just wondering if you could provide us an update on utilization rates and where they are versus where they've been historically and what.
When and if you think they are.
Going to start normalizing.
Hi, they were 34% this quarter that was down from 37% last quarter. It came to range around probably 33 to <unk> 40.
Really just episodically.
Customers look to us excess liquidity.
I don't think that utilization rates are kind of I don't think they represent either an upside or downside risk to the outstandings as kind of a pretty normal at this point.
Got it that's super helpful. Thanks, so much.
Sure.
Our next question comes from Laurie Hunsicker with Compass point.
Yeah, Hi, good morning.
Laurie.
Just wondered if we could go back to net interest income for a moment.
I just wanted to understand with respect to the P. P. P fees. So there was 1.8 million. This quarter that leaves you round numbers 600000 is that a right number hey buy.
Is there a better number.
Actually about 800 remaining on it.
Yeah.
Great, Okay, and you'd probably expect most of that will occur in the June quarter, or how you're thinking about that.
I would say.
It's becoming less and less of a.
Material part of our balance sheet and income statement, but you know I would say roughly half of that would run off in the second quarter and maybe.
And then another half of whats remaining in the third and.
So we will probably have some stragglers throughout the year, but kind.
It stepped down enough, where it's not a meaningful part of our balance sheet.
Okay, Great and then you know.
I think in and Kelly and Abraham you touched on this.
With with our questions, but I'm wondering if you could sort of help us think about it a little bit more.
In terms of.
Your deposits are fabulous into low costing and you know they were if we went back at 2019 I think your deposit betas will be fabulous as well can you just help us think a little bit about for every 25 basis points.
What that looks like.
Maybe just to drill it down a little bit more sense. Since your forward guide is looking less and the forward curve can you just help us think about it a little bit more.
The five to six basis point per quarter increase at least by my math is looking really pretty light I'm just trying to I'm just trying to understand that because you are so asset sensitive.
Mhm.
Every 25 basis point increase in fed funds is about.
900000 per quarter, so about 300000 per month.
And that's only on the fed funds to short end of the curve.
If the curve the long end were to go up 25, it's it's a little bit more.
Once but it's about 40000 per month, but it compounds because it just that's how the nature of the longer.
Longer term asset sensitive reprice.
The other the other factor Laurie to think about too.
As you know as as rates were coming down our bias was to invest a little bit longer.
Curious portfolio and now with kind of in that version and that trend will probably going to be investing shorter.
Even maybe or towards floaters in that environment. So it's going to give us the lower initial.
Initial yield, but hopefully a higher yield down the path.
Okay, Great. That's helpful and then with the noninterest income I just wanted to understand two things.
You had mentioned that included in your Securities loss was a onetime negative adjustment for the visa class B conversion did I get that right $400000.
Yes, yes.
Okay and can you just expand on that a little bit more.
Yeah. So.
When we sold our visa class B shares.
Took back a swap.
Conversion ratio, so visa reset that ratio.
And as part of the trades that we did.
A reset cost to US was 400000, so it's a one time reset and then going forward, we have that about $1 two per quarter.
Okay.
Okay.
And then.
Okay.
That was why there was a bump in that line.
It makes a lot of sense. Okay. And then can you can you also talk a little bit about within your noninterest income you could just remind us where you are in NSF and overdraft fees and you know where you were specifically for this quarter and.
And how you're thinking about it you know what your plans are to become a little bit more consumer friendly and and any impact that we would see on on fee income.
So what are the numbers for the quarter, yes for the quarter.
Total, it's about $4 million of which $3 million.
<unk> fees and 1 million is NSF fees, Yeah. We're obviously, that's a very topical.
<unk> right now Laurie and.
I would say, we're looking at our practices.
One thing I would note and I think most of this is true for most of the banks in this marketplace. We don't charge an account level fee on our accounts, so basically they're they're fee free so.
So I think that's a little bit different than some of the larger banks out there and something we're thinking through consideration wise.
And so we're looking at both <unk> as well as NSF.
In particular.
Nothing kind of decided at this point.
The last thing I would say is our practices have evolved pretty dramatically over over the past several years really.
Always in the direction of.
Being more supportive to our client base.
And I think we're going to continue to evolve in that direction, but clearly there is.
Theres, just a lot of activity around that space right now and we're aware of that.
Okay. That's helpful. Okay, and then last question.
Mary This one is for you and I Love your loan production quality aside I think its great and appreciate all that credit detail.
Yeah your reserves to loans ex PPP is at 122, it looks like they're still at it.
Of course, the question can you help us think about where that reserves to loan loan line may go in terms of that.
I was thinking about normalized loan loss provision.
I would expect it to move back to where we were at Gale and pre Covid, which was really at about 99 basis points and total coverage.
Great. Thanks for taking my question.
The calorie.
Our next question comes from Kelly Motta Bouquet BW.
Hi.
Thanks for letting me jump back on I just wanted to ask.
Quickly on the tax rate is 23% still look good.
Right to use for the full year.
Yes, 23% is still a good rate.
Thanks.
And I'm not showing any further questions at this time I'd like to turn the call back over to our host for any closing remarks.
I'd like to thank everyone for joining us today and for your continued interest in bank of Hawaii. Please feel free to contact me. If you have any additional questions or need further clarification on any of the topics discussed today. Thank you so much everyone.
Yes.
Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.
Yes.
Yes.
Good morning.
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Yes.
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