Q4 2022 Bank of Hawaii Corp Earnings Call
The conference will begin shortly to raise and lower Johan during Q&A, you can dial star one one.
[music].
Yeah.
Good day and thank you for standing by welcome to the Bank of Hawaii Corporation fourth quarter 2022 earnings conference call.
At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
To ask a question during the session you will need to press star one on your telephone and you will then hear an automated message advising your hands raised.
Withdraw your question. Please press star one one again please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Jennifer Lamb Senior Executive Vice President.
Sure and director of Investor Relations. Please go ahead.
Thank you good morning, good afternoon, everyone and thank you for joining us today on the call with me. This morning is our chairman President and CEO , Peter Ho, Our Chief Financial Officer, Dean She gave Maura and our Chief risk Officer, Mary Sellers before we get started let me remind you that today's conference call will contain some forward looking.
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 and release are available on our website <unk> com under Investor Relations.
Now I'd like to turn the call over to Peter Ho.
Thank you Jennifer good morning, or good afternoon, everyone. We appreciate your interest in bank of Hawaii.
The bank achieved another solid quarter performance to end the year loans grew two 4% on a linked basis at 11, 3% year on year, reflecting balanced growth across our corporate commercial and consumer businesses.
We're down one 3% from the prior quarter, but up one 3% from a year ago at quarter end. Our total deposit beta was 11, 5% cycle to date for lack of a diversified granular and seasoned nature of our deposit base by segment, our deposits are 50% consumer 42%.
<unk> at 8% public nearly half or 47% of our consumer and commercial deposits come from accounts under a half million dollars in account size.
And 73% of our deposits have a tenure of 10 plus years or more with bank of Hawaii.
Expenses were well controlled credit quality remains excellent return on average common equity was 21, 3% for the quarter.
As is our custom custom I'll now walk through local market conditions, and then hand, the call over to Dean who will delve deeper into the financials and then Mary sellers will touch on credit for the company at.
At that point, we'd be happy to entertain your questions.
Now moving on to slide three you can see that the economy, namely unemployment continues to improve and the islands November state unemployment rate was three 3%, marking the second straight months that has outperformed national unemployment as a whole.
Months.
The visitor sector continues to perform well, while our rivals remained down from pre pandemic levels. As a result of the continued lag in the international and then particular Japanese visitor segments overall visitor days or nearly at par to pre pandemic levels as visitors are visiting longer overall and the mix shift to visitors is too.
<unk> traditionally have longer staying segments.
On slide five you can see that Revpar is performing well ahead of pre pandemic levels, which has helped push overall visitor expenditures, 40% higher than pre pandemic levels on a year to date basis.
Finally values and the Wahoo housing market remained stable with the median home price of a single family home running flat at $1 billion in December while condominium prices were up modestly in December at $503000.
Inventory levels remain tight despite a meaningfully meaningful slowdown in sales.
Now, let me call. It let me turn the call over to Dean Dean.
Thank you Peter.
Our solid loan growth continued in the fourth quarter total loans increased by $324 million, two 4% linked quarter and by $1 4 billion or 11, 3% year on year.
In 2022, we realized double digit growth across both commercial and consumer loan portfolios with year over year growth of 10% and 12, 2% respectively.
As Mary will discuss loans continue to be predominantly real estate secured with low ltvs.
<unk> digit annualized growth trend has led to significant market share gains in our primary lending market, where we hold the largest market share.
Our deposits remain a source of strength and value nearly 75% of our deposit customers have been with us for 10 years or more and nearly half of 20 years or more.
92% of our deposits are from core commercial and consumer customers and the remaining 8% consists of public deposits that are predominantly government operating accounts.
92% of our deposits are in core checking and savings accounts with 33% and noninterest bearing and only 8% in time deposits.
As expected during the quarter, our deposit mix shifted modestly to higher yielding deposit products with increases in our TBA and savings balances.
Despite this our total deposit costs remain well managed with an average rate of 46 basis points in the quarter.
Despite a modest decrease in linked quarter on a linked quarter basis total deposits increased by $256 million or one 3% in 2022.
Our total deposit betas betas were well controlled at 11, 5% cycle to date, which demonstrates our ability to maintain liquidity at a reasonable cost.
From an earning asset perspective, net interest income and margin are being supported by strong cash flows and overall asset repricing at higher rates.
In particular, the yields on maturities and Paydowns of loans and investments in the fourth quarter were three eight and 2% respectively.
These cash flows were reinvested predominantly into new loans, which yielded approximately five 2% in the quarter.
With nearly $3 billion of annual cash flows from maturities and paydowns of loans and investments, we have ample opportunity to redeploy funds into higher yielding assets, particularly with reinvestment into loans, which which has been the recent experience.
In addition to strong cash flow another $3 4 billion in assets are repricing annually, which provides additional rate sensitivity.
Together, our assets provide a balance between short term and long term repricing characteristics.
Net interest income in the fourth quarter was $140 7 million up $14 3 million or 11, 4% from the fourth quarter of 2021.
Excluding noncore PPP loan interest income the year over year increase in NII was $19 1 million or 15, 7%.
Compared to the pre pandemic fourth quarter of 2019, our NII has improved by $16 9 million or 13, 6%.
The NII improvement over the years is driven by continued strong core loan growth rising interest rates and managed deposit rates.
Linked quarter net interest income was lower by 900000 or less than 1%.
In addition to the impact of the inverted yield curve, we have entered the period, where deposit rates and betas are accelerating.
And deposit balances are decreasing across the banking industry.
Both of which impacted our net interest income.
During the quarter, we added wholesale funding at an attractive rate to supplement our current funding and to provide long term fixed.
Fixed rate funding to mitigate the risk of higher for higher for longer short term rates.
Sure.
As we look for conditions that we experienced in the fourth quarter remained.
Continued loan growth and asset repricing will be accretive while the persistence of the inverted yield curve and higher deposit costs will be dilutive.
The outlook for deposit balances and deposit betas remain uncertain.
However, as described earlier the composition of our deposit base affords us greater flexibility to manage our funding costs through the uncertainty.
During the quarter as is our practice, we managed our expenses in a disciplined manner as economic conditions remain unclear.
Noninterest expense in the fourth quarter totaled $102 7 million down $3 million linked quarter.
As a reminder included in the third quarter expenses were severance expenses of $1 8 million.
Adjusting for the severance in the third quarter expenses decreased by $1 2 million linked quarter.
This was a result of ongoing efficiencies in a number of areas, which enabled us to reduce the pace of hiring while continuing to invest in the business.
Notably our investment.
Innovation spend in the quarter was reduced but did not end as we continue to position the company for the future.
For the full year of 2023 expenses are expected to increase by approximately 3% despite the.
<unk> of continued elevated inflation.
And industry wide increase of FDIC.
We estimate an annual merit increases each represent 1% of the 3% increase.
Another 1% has been allocated to our continued investment in the company.
Be it at a pace slower than in prior years.
Although inflation expectations are still elevated.
Efficiencies gained from operations and prior investments are expected to offset inflationary increases.
As part of this ongoing efficiency effort, we continue to rationalize operations and we will be reducing staffing in several areas.
These actions will result in a $2 $9 million severance expense in the current quarter.
Which is in addition to the 3% core expense guide.
It is important to note that these actions will result in annualized savings of $3 $3 million.
As a reminder, seasonal payroll taxes and benefits expense bump from incentive payouts will be included in the first quarter expenses.
This year the estimated seasonal impact is $4 million compared to the $3 7 million in the first quarter of 2022.
This amount is included in the full year expense guidance for 2023.
To summarize our financial performance in the fourth quarter of 2022 net income was $61 3 million, an increase of $8 5 million linked quarter or 16%.
Fourth quarter earnings per common share was $1 50.
An increase of 22 or 17, 2%.
For the full year of 2022 net income was $225 8 million and earnings per common share was $5 48.
As Mary will discuss we recorded a provision for credit losses of $200000 this quarter.
Noninterest income totaled $41 2 million in the fourth quarter.
As a reminder, the third quarter's income was negatively impacted by a onetime $6 $9 million charge related to the loss on sale of leased equipment and a $900000 charge related to a change in the visa class B conversion ratio, which is reported as a contra revenue item in <unk>.
<unk> securities gains and losses.
Adjusting for these third quarter items noninterest income increased by $2 $7 million linked quarter, primarily due to higher customer derivative and foreign exchange revenue.
We expect noninterest income will average approximately $39 million per quarter in 2023 as market volatility and uncertainty continued to weigh on asset management income and higher mortgage rates will continue to suppress mortgage banking income.
In the first quarter. There will also be a contra revenue item of 600000, when additional class B.
Class B conversion ratio adjustment, which will be reflected as part of the investment securities gains and losses.
Our return on assets in the fourth quarter was 1.05%. The return on common equity was 20, 128% and our efficiency ratio was $56 four 6%.
Net interest margin was 260% unchanged from the third quarter.
Okay.
The effective tax rate in the fourth quarter was 22, 4%.
And the tax rate in 2023 is expected to be approximately 23%.
Our capital management, our capital levels remained strong.
Our CET, one and total capital ratios were 10, 92%.
13, 7%, respectively, with a healthy excess above regulatory minimums, well capitalized requirements.
Our risk weighted assets relative to total assets remain well below the levels of our peers, reflecting our lower risk profile and providing us with ample room to continue growing while maintaining strong capital levels.
During the fourth quarter, we paid out $28 million or <unk>, 46% of net income available to common shareholders in dividends and $2 million and preferred stock dividends.
We repurchased 192000 shares of common stock for a total of $15 million.
In addition, our board increased the authorization under the share repurchase program by an additional $100 million, bringing the total remaining.
Authorization to approximately $136 million.
And finally, our board declared a dividend of <unk> 70 per common share for the first quarter of 2023 now.
Now I'll turn the call over to Mary.
Thank you Dean.
Our loan portfolio construct with 97% in Hawaii, and Guam assets continues to reflect our strategy of lending in markets, we understand and the people we know.
This underpinning coupled with consistent conservative underwriting and active portfolio management resulted in a loan portfolio that is diversified by category has appropriately sized exposure and is 80% secured by quality real estate with a combined weighted average loan to value of 56%.
Credit performance remained very strong in the fourth quarter net loan charge offs were one 9 million or five basis points of average loan and leases annualized compared with three basis points in the third quarter and two basis points in the fourth quarter of last year for the full year net loan charge offs were $6 million or five.
<unk> points, compared with $5 1 million or four basis points from 21.
Nonperforming assets totaled $12 6 million or nine basis points at the end of the quarter down one basis point for the linked period and down six basis points Euro per year, all nonperforming assets are secured with real estate with a weighted average loan to value of 58%.
<unk> delinquencies 30 days or more totaled $31 million or 23 basis points up from 18 basis points in the third quarter and flat with the fourth quarter of 'twenty one.
And our criticized loan exposure represented just one point or 9% of total loans down three basis points from the prior quarter and 111 basis points year over year as we continue to see sustained improvement in the financial performance of those customers who had been most impacted by Covid.
Our consistent conservative approach to underwriting as reflected in our consistently strong quality of our loan production and portfolio.
In 2022, 67% of commercial production with secured with quality real estate conservatively leveraged <unk>.
Commercial mortgage production had a weighted average loan to value of 59% and construction production had a weighted average loan to value of 64%.
76% of 2022 consumer production was 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 65 and 59% respectively.
71% of our home equity production was in first lien position.
Similarly, FICO scores for all our consumer production remains strong.
Portfolio monitoring metrics also remained very strong our commercial mortgage and construction portfolios have weighted average loan to values of 56 and 63% respectively.
<unk> mortgage and home equity portfolios have weighted average loan to values or combined weighted average loan to values of 57 and 52% respectively.
72% of <unk>.
Home equity portfolio is in a first lien position in.
And monitoring FICO remained very strong.
At the end of the quarter the allowance for credit losses was $144 4 million down $2 million for the linked quarter and the ratio of the allowance to total loans and leases outstanding was 1.6% down four basis points from the prior quarter.
The decrease this quarter was driven off your heroes December 2022 forecast, which reflected lower unemployment rates for 'twenty two 'twenty three and 'twenty. Four then in their prior September forecast.
You hear this outlook is based upon actual lower unemployment rates realized in 'twenty, two and continued strength in tourism with any softening in domestic demand due to a recession to offset by a continued recovery in our commercial this year base, particularly Japan.
Coupled with strength in construction given the number of planned federal or state infrastructure projects.
Can you consider downside risk of a recession the impact some inflation and rising interest rates. The reserve for unfunded credit commitments was $6 8 million at the end of the quarter up 300000 for the linked period.
I'll now turn the call back to Peter.
Thanks Barry.
We enter into 2023 the forward view on the economy is somewhat cloudy.
Economic conditions, while currently they possibly be tested in the coming days, where the continued effects of tighter fed policy.
Asset values may also be challenged by higher rates.
Bank of Hawaii remains well geared for potentially choppy waters, our credit portfolio is the beneficiary of conservative underwriting standards not just of late but over the course of many years our deposit base is a great source of strength diversified granular and long tenured.
Our investment assets are both abundant high quality and highly liquid.
And then we'd be happy to respond to your questions.
Yeah.
As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, please standby, while we compile the Q&A roster.
Okay.
Our first question comes from Kelly Motta with K B W. Your line is now open.
Hi, good morning. Thank you so much for the question.
Kelly.
I would like to just start off with I really appreciated all the color and moving parts on the expenses and your outlook for the year, but just as a point of clarification.
What are you using as your starting point for expenses for.
Relative to 2022 is at about 400.
13 million or is there a different number I should be using there was some one time charges.
In 2022.
$4 15.
Perfect.
Right.
That's that's really helpful.
Next I would like to.
Your loan growth and this is something you pointed out has been really strong in the double digits.
Just wondering as you look ahead.
Any commentary on demand and maybe.
More conservatism that would bring that rate down just any color on how we should be thinking about opportunities for loan growth ahead as well as how you plan on funding that growth whether it's.
Through our wholesale sales forces or flows off the securities book or anything like that would be really helpful.
Yes, Kelly so you're right we've been fortunate to have been able to drive annualized loan growth for a number of quarters now.
Suspect as it kind of tailed off on.
Our formal remarks that.
Yes, we do see and feel things tightening a bit.
I think we've got a reasonable forward view on the first quarter loan production wise.
But I would suspect that 23 is not likely to be a double digit loan growth here.
I think if we're pushing into the mid slash higher single digit levels that probably would be a level that reflects overall market conditions.
We really arent changing our underwriting standards and policies, because we pretty much keep those flat through cycles, but I think what may be happening as borrower profiles may be deteriorating a bit as inflation takes hold as the economy slows a bit and as interest rates begin to.
To bite a little bit a little bit harder into the cap structure, and then lastly, I'd say that the residential market, which is a big source of.
Value for US has just been.
Lately impacted by rates and the slowdown in refi.
Got it that's really helpful.
Sounds like it.
In terms of your outlook for margin that that's largely.
The big variable there is on the deposit side, both the betas and.
Just overall.
Flows of deposits and where those come out.
Your margin was flat this quarter.
Do you think we've reached peak margins at this point in the cycle or.
How should we be thinking about that ahead.
Yes, I think near term, we have reached peak margin in the fourth quarter.
So modest decreases at least in the first and second quarters.
Got it.
That's helpful. Thanks, I'll step back.
Thanks Kelly.
Please standby for next question.
Okay.
Our next question comes from Andrew Liesch with Piper Sandler Your line is now open.
Hi, everyone. Good morning.
Sure.
Question on the fee income guide $39 million, if I just look at the wealth side this quarter mortgage banking this quarter.
Some higher than normal fees, maybe in the other line.
You highlighted like wealth and mortgage as being the main line items, where there could be some pressure, but other than that.
At 39 million or it seems a little light to me is there are there are there other areas where there is some.
Some weakness there has been pressure on fee income.
Yeah. So I mean, I think Andrew the way to think about it as 39 is probably a good baseline and then we have a number of.
Line items that are just a little bit more unpredictable given the rate environment. So obviously mortgage income.
Not likely to be a big contributor.
Historically has been a big component of a 40 plus million dollars.
Fee income quarter, that's just not there right now.
Asset management side, I would say as long as.
Then finally kind of the big the big mover is really our swap revenue and.
And when rates are very low and production levels are knowable and buoyant.
That's a very steady and high performing space for us as the markets become choppy here, a little bit more difficult to figure out production wise and as people are a little bit more hesitant to just delve straight into a swap transaction because theyre trying to figure out where rates are going to fall out that number can swing a couple of million.
One way or another in a quarter and thats really kind of what's driving our conservative conservatism around the 39, we hope that represents more of a downside.
With some attendant upside attached to it.
Got it alright.
That's really helpful color there. Thank you.
And then.
Dean just a question following up on <unk> question on the margin, peaking you said pressure over the next couple of quarters.
What would alleviate that pressure would it be rate cuts is that just some lag on asset repricing just curious what.
Olivia that pressure.
Right. So what we have kind of built into as you saw our rate outlook. If you will is kind of the fed getting to a 5%.
Handle on.
Fed funds, so what could help us which is really not our base case is that they don't raise rates anymore.
Realistically I don't know if thats really in the cards right now, but that would help relieve some of the pressure on the NIM.
Going forward, yes, yes, Andrew I would chime in.
You saw our cycled the Zip beta, which I think by market standards is pretty pretty darn low.
So I think we still have some late.
Expansion on the on the deposit paying side.
And that may begin to catch up to where the fed has already pushed market rates. So I think that could be a tougher environment for us in the next couple of quarters.
And then increasingly I guess, what I would point to is.
NIM Kent can come in a lot of different way shapes and forms in this market right now.
Increasingly pushing more towards delta.
Which coincidentally I think could also be off a bit a touch in the coming quarters, but really that's our area of emphasis and trying to bolster NII by hopefully some additional deposit growth at reasonable rates.
Got you.
Alright, yes, that's that's helpful I'll step back thanks.
Thanks.
Please standby for our next question.
Our next question comes from Jeff <unk> with D. A Davidson your line is now open.
Hi, Thanks, good morning.
Hi, Jeff.
A follow on I guess to that last one Peter.
On the beta.
Just interested in your thoughts it sounds like.
Maybe Q4 wasn't the total acceleration or <unk>.
Catching up quarter I would've assumed.
Much of the rate hikes, we've had and the rate sensitive customers.
Rush to the gate and dealt with that I guess your expectation is that that just continues to drift into the into the beta and as we get into 'twenty three you'll see additional pressure there.
Maybe more succinctly.
You don't think Q4 was a catch up quarter and would expect.
Further pressure from here.
I would I would.
I think that.
And and candidly our strategy into the teeth of that was to be pretty conservative around our betas at our pricing because give it our market position in the in the deposit Americans. We serve we thought that would frankly just be the best course, as we as we kind of wide.
And out into you know a little bit more experienced than what we're seeing right volume standpoint, I thought that the quarters deposit performance was okay Franklin I'd like to get the flat to slightly up and that may require some additional pricing.
So that's what certainly you may see that on the NIM and hopefully our our hope would be to see would be able to offset.
That price erosion on NII bye bye volume increases.
But but I, but I would point out that.
And I could very well drift down a bit in the coming quarters.
I don't think that would be a.
Overly pessimistic view.
Yep.
Okay. So there's definitely a balance deposit balance part of the equation.
Sure enough.
Wanted to also pivot to the.
The visitor account and and.
I guess, if you look at the numbers sort of.
A little bit swelling of the domestic and lifting of Japan, and international I guess kind of suggesting settling more towards.
<unk>.
Run rates and that may be oversimplifying, but always interested Peter and your take on.
Kind of wherever headed and kind of how those trends play out into into twenty-three.
Right. So I'll overall, I'd say that the the visitor industry is.
Yeah, I think kind of <unk>.
<unk> paused its way into a pretty good year 2022.
Basically the the U S market has has overperformed.
Both five volumes as well as by spending a rebel volumes and spending.
Pan is coming back slowly so when I look at.
And I look at November numbers year to date, Japan was down 80, 689%.
But for the month of November there down in the seventies. So there's you know there's some some moderating improve it there and then I I guess, what I would say is the other Japan's a big chunk of international which is about a third of our visitor business the other markets Canada.
Australia some of the other foreign countries or perform are beginning to form quite a bit better. So there may be better than the Japanese experience by call it half.
So.
The overall you know the bottom line to the visitor segment has been generally positive I'd say to pre pandemic levels. That's been led by kind of outsize U S domestic potentially as that begins to fall off a bit as the economy cools, we're hoping to see that and filled by and improve it in Japanese.
<unk> and other international visitor, but it will see it's been a slow it's been a slow rise for Japan.
Okay. Thank you and and maybe it would just try last housekeeping Dean I missed the.
Could you repeat the the contra expense on the visa front you mentioned 600000 is that for the year by the quarter.
If it's for the first order in the first quarter.
And then not to recur or just a one quarter event.
Well I mean, we we in the third quarter, there wasn't one and I think in the first quarter of last year I would like to say, it's one time, but it's it's just dependent on how visa manages that if the marathon visa yeah Mark on visa.
Okay.
Got it.
Okay. Thank you.
Thanks, Jeff.
Please stand by for next question.
Our next question comes from Lori Hunsicker with Comcast point your lines now and then.
Hi, Thanks, good morning.
<unk> <unk> <unk>.
<unk>, maybe where Kelly Andrea and <unk>, we're catching on that empty hang up that just wanted.
Potentially did fell down a little bit more on the funding here can you talk about how you're thinking about borrowing parents.
Okay.
Uhm.
Very small validate your liability.
Clint number one in a sitting at 410 nine how should we think about that.
<unk>, because there's a higher passing and then <unk>.
Obviously the jump there do you have that breakdown on.
What part of that is time and the number three can you comment on the non interest bearing singer.
Interest bearing average balance or dropped on my can you can you help us think about that going forward with that just an anomaly in the corner, maybe help us think a little bit about that thanks.
Sure so.
Looking at the wholesale funding that it was a combination of several factors that one was just supplement the current funding that we have deposits.
We did.
I want to protect ourselves or at least hedged a portion of the.
Look on ready to wear.
If if the fed stays higher for longer on the in terms of fed funds. These.
Longer term funding fixed rate funding does give us a little bit of damage. There. The the average rate on those were about $3, 92%. So below fed funds. Currently so it does protect us a bit there.
Going forward.
Just depend on how deposits.
Balance levels transition, but.
But we also are looking through the portfolio, where we traditionally have the running off the.
The runoff from that could help fund the lone Grove.
In terms of the non interest bearing yeah, we I from what I can see where.
It wasn't unusual that we had a draw down you know there there is a kind of a shift to a higher yielding deep.
Deposit products.
Now that fed funds.
Does that 4.5%.
A lot of the some of the drawdown did go to higher yielding products and then there was Ah. Some that were just coming off we had some title companies that had.
Uhm projects that were closing in the quarter that off the took some money out so that was kind of independent of the right environment.
Yeah, I mean, it wasn't it wasn't terribly surprising to us.
To see money moving out of non interest bearing.
That's still that was last quarter, 34.9% of total deposits this quarter, 32.6% sort of frequent drop there.
Interest bearing demand was basically flat.
And savings was basically flat so kind of the the catch all was in time and.
Your question.
About the government deposits that was.
Pretty much flat.
<unk> of demand in savings.
Linked basis, and then up.
On.
Deposits at 180 million last corner.
Is that Delta increase bearing your total public deposits is that all time or do you have an exact number there yeah. So total public deposits.
Last quarter was 1 billion 236.
This quarter's 1 billion seven O six.
And public.
Public time.
Was 180.
And the third quarter and 587 in the fourth quarter.
Mmm seven okay.
Got it that's helpful. Okay, and I mean, you know you're going to deposit ratio there'll be able to follow your loan to quite a <unk>.
Any of the quiddity concerns or how how you're thinking about that.
No. We don't have liquidity concerns I think I think we frankly were priced too tight intra quarter.
It works kind of hopeful of picking up more deposits of.
And the quarter to one that they would transpire, we had to move obviously to more wholesale funding sources. So you know what the teams are both consumer and commercial are working on you know for the coming quarters is to be a little bit more dynamic from a pricing standpoint that generate more volume levels.
Okay. Okay.
Okay, Great and then Mary just one one quick question for you and apparently your credit.
Great all the way around but specifically on my auto Keith can you just help us think about that we saw.
We saw obviously pretty nice jump in an auto loan corner with that purchase Sir what was that and then I guess the charge off Sir your.
It seems like that's that's just one area of weakness that continues to grow and apparently there's a concern more generally within confirmatory, even though you're consume rebeccas elhi can you just help us think a little bit about that thanks.
Sure sorry, if I look at indirect or 30, plus this quarter.
In terms of delinquency with 182, and that's versus 138 from the prior quarter, but if I look at 2019, we're still to load that at 224.
And what we saw in 2018 months or delinquency rate was running 228.
In terms of charge offering some indirect where we average 35 basis points this year.
And in 2019 that was 59 and in 2018 that was 80 basis points. So you know in early stage. We did 30 to 59, we saw a modest uptick.
But still below what we've been seeing pre pandemic.
We would expect us consumers can under more stress that we would see that our portfolio to normalize a bit but right now our lesson 620, everything all the metrics aren't showing a huge decline in quality.
And Lori just just to know cause I think it's important.
We don't do purchase.
Yeah, Yeah, we don't purchase portfolios. So all of our indirect all of our all of our consumer is R. As organically driven off of our.
Off of our delivery channels.
Okay got it okay. Thanks, I'll leave it there.
Yeah.
At this time I show no further questions I would now like to turn the conference back to Jennifer land for 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 everyone.
This concludes today's conference call. Thank you for participating you may now disconnect.
The conference will begin shortly.
As in lower Yohan during Q&A, you can dial 911.
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