Q1 2024 First Hawaiian Inc Earnings Call
Okay.
Good day and thank you for standing by welcome to the first Hawaiian Inc. Q1, 2024 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.
Speaker Change: You will then hear an automated message advising it at your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker, Mr. Kevin Hockey Llama Investor Relations manager. Please go ahead.
Kevin Haseyama: Thank you Tanya and thank you everyone for joining us as we review our financial results for the first quarter of 2024 with me today are Bob Harrison, Chairman, President and CEO, Jamie Moses Chief Financial Officer, and Leigh Nakamura, Chief Risk Officer, we.
Kevin Haseyama: We have prepared a slide presentation that we will refer 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.
Kevin Haseyama: During today's call, we will be making forward looking statements. So please refer to ours to slide one for our Safe Harbor statement. We may also discuss certain non-GAAP financial measures.
Kevin Haseyama: Phoenix two this presentation contains reconciliations of these non-GAAP financial measurements to the most directly comparable GAAP measurements.
And now I'll turn the call over to Bob.
Robert Scott Harrison: Good morning, everyone I'll start with an overview of the local economy.
Robert Scott Harrison: Hawaii economy continued to perform well with the state unemployment rate remaining low.
Robert Scott Harrison: As a as Debbie and the construction industry is healthy.
Robert Scott Harrison: Statewide seasonally adjusted unemployment rate for March was three 1%.
Robert Scott Harrison: Compared to the national unemployment rate of three 8%.
Statewide visitor industry continued to recover faster than expected following the valley wildfires.
Robert Scott Harrison: But still remains slightly below 2023 levels.
Robert Scott Harrison: The legislative session is wrapping up and additional funding was secured for the Hawaii Tourism authority.
Robert Scott Harrison: And a new marketing campaign was announced a couple of days ago. So things are looking up for that.
Robert Scott Harrison: Through February total visitor arrivals were down 6%.
Robert Scott Harrison: Spending was down one 9% compared to 2023 levels.
Robert Scott Harrison: That was primarily due to declines on Maui.
Excluding valley arrivals and spending or above 2023 levels.
Robert Scott Harrison: Growth in international visitors, who have helped offset declining builders in the U S mainland.
Robert Scott Harrison: With increases in Japanese visitors make up most of the increase in the international arrivals.
Robert Scott Harrison: The housing market as rig relatively stable despite reduced activity levels.
Robert Scott Harrison: In March the median sales price for a single family home on Oahu was $1 1 million.
Robert Scott Harrison: A one 5% higher than 2023.
The median sales price for condos on Oahu with $500000 six 7% below the previous year.
Robert Scott Harrison: Turning to slide two I will go over the highlights of our first quarter financial performance.
Robert Scott Harrison: We started the year with a solid quarter net income was $54 3 million or <unk> 42 per share.
Robert Scott Harrison: The return on average tangible assets was 94%.
Robert Scott Harrison: And the return on average tangible common equity was 14 five 3%.
Robert Scott Harrison: As expected the net interest margin expanded in the first quarter. This drove a $2 $6 million increase in net interest income versus the prior quarter.
Robert Scott Harrison: Turning to slide three we compete we continue to execute the balance sheet optimization that started in the fourth quarter with the sale of $526 million of investment Securities.
Robert Scott Harrison: During the first quarter, we used those proceeds to pay down about $470 million of higher cost public time deposits.
Robert Scott Harrison: The duration of the investment portfolio increased slightly in Q1 as a result of the security sales during the prior quarter.
Robert Scott Harrison: Our balance sheet strength continued to increase as we grew capital levels.
Robert Scott Harrison: We have ample liquidity.
Robert Scott Harrison: Turning to slide four period end loans and leases were $14 3 billion.
Robert Scott Harrison: About $33 million lower than December 31.
Robert Scott Harrison: Line drive for ongoing construction projects drove the $72 million increase in construction loans.
Robert Scott Harrison: We did continue to face headwinds due to the slowdown in residential real estate market and the continued run off in the indirect auto portfolio.
Robert Scott Harrison: We still believe that loan demand will pick up in the second half of the year and that full year growth will be in the low single digit rate now.
Robert Scott Harrison: Now I'll turn it over to Jamie.
James M. Moses: Thanks, Bob and good morning, everyone turning to slide five total deposit balances declined by $663 million, primarily due to the $470 million decrease in public time deposits.
James M. Moses: The decrease in public cost I'm, sorry, excuse me in higher cost public time was intentional and was part of the overall balance sheet actions that we announced on our last call.
James M. Moses: Retail deposits increased by $142 million in the first quarter and that was offset by a $355 million decline in commercial deposits.
James M. Moses: The drop in commercial deposits was primarily due to normal fluctuations and a few large commercial accounts as well as about $170 million of insurance payments related to the Maui wildfires.
James M. Moses: The noninterest bearing deposit ratio was 34% at the end of the quarter.
James M. Moses: The rate of increase in deposit cost continued to slow down in the first quarter. Our total cost of deposits for the quarter was 165 basis points, a nine basis point increase from the prior quarter.
James M. Moses: Turning to slide six net interest income increased $2 $6 million from the prior quarter to $154 $4 million.
James M. Moses: Our reported net interest margin increased by 10 basis points to 209% to 91%.
James M. Moses: We had a nonrecurring interest income related to the recognition of interest on deferred loans tied to the Maui wildfires that added about $1 $5 million to interest income and three basis points to the margin in the first quarter.
James M. Moses: Barton in March was $2, 87% and we are projecting the NIM in the second quarter to be about $2 eight 9%.
James M. Moses: We do expect that the NIM will increase about one to two basis points per quarter for the remainder of the year.
James M. Moses: Through the end of the first quarter. The cumulative betas were 46, 5% on interest bearing deposits and 32% on total deposits.
James M. Moses: Turning to slide seven noninterest income was 51 4 million $7 million less than the prior quarter.
James M. Moses: We had about $2 million of nonrecurring income in Q2 excuse me in Q1 as a result of insurance proceeds we received for losses, we incurred during the Lahaina wildfires.
James M. Moses: We continue to expect quarterly noninterest income to be in the $49 million to $50 million range.
James M. Moses: Noninterest expenses were $128 8 million in the first quarter and included a $4 1 million FDIC special assessment.
James M. Moses: Excluding that special assessment expenses were in line with our expectations and we continue to expect full year expenses to be around $500 million.
James M. Moses: Now I'll turn it over to Lee. Thank you Jami moving to slide eight the bank maintained its strong credit performance and healthy credit metrics in the first quarter, while we have seen some modest deterioration in credit quality our experience. So far is well within our expectations. We are not observing any broad signs of weakness across either the <unk>.
Lee: Tumor or commercial loan book, and we have more than sufficient loan loss coverage classified assets increased by $64 $3 million driven by several downgraded credit. This caused the ratio of classified assets to total loans and leases increased by 45 basis points to 64 basis points of total loans and leases.
Lee: Of that $64 $3 million increased $24 4 million was paid off in full after the end of the first quarter.
Lee: Year to date net charge offs were $3 8 million.
Lee: Our annualized year to date net charge off rate was 11 basis points two basis points higher than in the fourth quarter.
Lee: Nonperforming assets and loans past due 90 days or more were 15 basis points of total loans and leases at the end of the first quarter unchanged from the prior quarter and finally, the bank recorded a $6 3 million provision in the first quarter moving.
Lee: Moving to slide nine we show our first quarter allowance for credit losses broken out by disclosure segment.
Lee: The asset ACL increased by $3 3 million to $159 8 billion with.
Lee: With coverage rising three basis points to 112% of total loans and leases. The ACL continues to include a reserve for the potential impact of the Maui wildfires. This estimate includes the potential impact to borrow borrowers located both inside and outside of the fire zones as well as any insurance coverage.
Lee: Turning to slide 10, we provide an updated snapshot of our commercial real estate exposure CRE represents approximately 30% of our total loans and leases credit quality remained strong with ltvs manageable and criticized loans continuing to comprise a very small portion of the portfolio. Let me now turn the call back.
Lee: To Bob <unk> for any closing remarks.
Robert Scott Harrison: Thank you Jamie Thank you Lee.
Robert Scott Harrison: We'd welcome any questions that you would have.
Certainly.
Speaker Change: Ladies and gentlemen, if you have any questions. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please stand Pat will be compile the Q&A roster.
Speaker Change: And one moment for your first question.
Speaker Change: And our first question will come from David Feaster of Raymond James Your line is open.
David Pipkin Feaster: Hey, good morning, everybody.
David Pipkin Feaster: Good morning.
David Pipkin Feaster: Doing great.
David Pipkin Feaster: Maybe just touching on the margin side I. Appreciate all the color you guys gave but I mean really like.
David Pipkin Feaster: The key driver to the margin is going to be deposit performance right, especially on the Niv front I'm curious if you could help us maybe think through how how the niv balances trended throughout the quarter.
David Pipkin Feaster: And just any thoughts on overall core deposits.
David Pipkin Feaster: Growth in the initiatives that you've got in place.
David Pipkin Feaster: From that perspective, just curious kind of on the deposit side, how do you think things play out.
David Pipkin Feaster: Yeah, Thanks, Dave It's Jamie.
James M. Moses: And in terms of what part of your question right, which was sort of performance throughout the quarter.
Most of the noninterest bearing decline that we saw that happened in January and February moderated quite a bit in March.
James M. Moses: But our guide forward.
James M. Moses: It does include some continued.
James M. Moses: Noninterest bearing movement from again from Abbvie into some.
James M. Moses: Interest bearing deposit accounts and I think you kind of nailed the.
James M. Moses: The forward NIM expectations as well right that is that that's going to be kind of entirely driven by how that performance about how that migration happens throughout the year. So.
James M. Moses: We are modeling right.
With our guidance that kind of.
James M. Moses: That implies some decrease from Q1 into Q2 continued moderation in Q3 and continued moderation in Q4.
James M. Moses: So that's kind of what the basis for our for our NIM guidance is.
James M. Moses: And then as it relates to deposit gathering initiatives I think we're really continued to be focused on generating net new checking accounts.
James M. Moses: Really where the focus is.
James M. Moses: We have our <unk>.
James M. Moses: Securities portfolio continues to run off where we're going to continue to do that so our need to grow deposits has moderated a little bit because of that.
James M. Moses: And with our with our loan growth guidance and sort of the low single digit area the need to really be hyper competitive and go out and gather.
James M. Moses: New money market accounts are newer or Cds and things like that it's kind of.
James M. Moses: I would say it.
James M. Moses: Moderate need for those things. So we're really focused on net new checking accounts and then the second part of that in terms of deposits really it comes down to it our.
James M. Moses: Our relationships and so we want to make sure that we've got.
James M. Moses: We continue to be there for our customers.
James M. Moses: In the ways that they needed to be so to the extent that there are more deposit customers that have some rate sensitivity, we will respond to that with them.
James M. Moses: And to the extent that we can gather more non interest bearing deposits, obviously, we'd like that as well.
James M. Moses: David This is Bob maybe just to add to Jamie's comments, which are spot on is just to remember from the call last quarter. Our last quarter's call that this year, we have about $1 billion five of fixed rate loans rolling over $600 million of securities. So that's what's really helping drive that mimics.
James M. Moses: <unk> throughout the year.
Speaker Change: You can't exactly predict what's going to happen with deposits to Jamie's point, but that we do know that those will reset in the securities will mature.
Speaker Change: Yeah.
Speaker Change: And that kind of feeds right into my next question and that's a really good point.
And you guys are look you're naturally rate sensitive just given the strength of your deposit base rate and <unk> been active managing the balance sheet.
Speaker Change: With the Securities book and all that.
Speaker Change: I'm curious how do you think about managing the balance sheet today right.
Speaker Change: The rate outlook continues to change pretty rapidly.
Speaker Change: One second everybody is worried about rate cuts and now we're talking about are higher for longer environment, but I'm. Just curious how do you think about managing the balance sheet. At this point just kind of given that uncertainty on the rate front.
Speaker Change: And anything that you guys are considering at this point.
Speaker Change:
Speaker Change: It's a great question, Dave I think the way that I'm kind of thinking about it right now is that.
Speaker Change: We have this we have the securities portfolio, yielding 230 or somewhere in that neighborhood.
Speaker Change: The margins, we're funding that with 5%.
Speaker Change: Higher cost deposits and so on.
Speaker Change: At the moment I'm kind of we're kind of waiting biding, our time I would say right. We're kind of just managing through that natural grind.
Speaker Change: We have we feel really good about the cash flows off that portfolio.
It was structured in such a way so that it wouldn't extend or contract too much given the different rate environment. So what we're really focused on is <unk>.
Speaker Change: Helping our customers being there for our customers to the extent that there is loan growth opportunities with our customers we want to be there for that.
Speaker Change: In the meantime, we're really thinking about the overall balance sheet kind of on the margins in the securities portfolio that is going to continue to run off.
Speaker Change: And we will fill in the gaps where we need on the funding side.
Speaker Change: With public time deposits if that if that's required so I don't we're not really thinking about.
Speaker Change: Our hedging anything at this point, we feel pretty good about where we're at.
Speaker Change: Even in a down rate scenario.
Speaker Change: 100 basis points down 200 basis points down that's still.
That's still a.
Speaker Change: Our net a net positive action with replacing securities portfolio and running off.
Speaker Change: The time deposit. So we also have an <unk> borrowing that is going to mature in the third quarter. So.
Speaker Change: There's a lot of sort of moving parts there, but at the moment I think I think we're comfortable with the balance sheet, we like the way we're doing it as you say.
Speaker Change: Outlooks change.
Speaker Change: Intra day, even today right so.
Speaker Change: We're really trying to just be focused on on on our customers and just grinding through this sort of odd mix at the moment with the securities portfolio and in the end.
Speaker Change: Marginal higher cost of funds.
That's extremely helpful could you remind us the size of that upcoming maturity and the rate on it.
Speaker Change: Oh, the <unk>, it's a $500 million.
Speaker Change: Going to mature in September number for September one and it is I think it's at a 490 right.
Speaker Change: Okay.
Speaker Change: Perfect and then just just last one from me look you guys touched on credit broadly and you feel like you're well covered talked about some some downgrades that you saw on the book I mean, non accruals held steady and it's benign.
Talked about some downgrades I was curious what drove those and maybe just your thoughts more broadly on credit what's youre seeing what youre watching closely and just any thoughts even on CRE you just kind of given the market type of focus on that segment.
Speaker Change: Davis, Bob I'll start and hand, it over to Lee is a really interesting quarter other than a handful of downgrades as she can speak to better.
Speaker Change: It really across the board we stayed the same or got better on every other metric.
Speaker Change: Delinquencies for NPA is et cetera, so we aren't seeing any signs of something we pride ourselves on is being very thoughtful about.
Speaker Change: Supporting borrowers and making sure that they can they have.
Lee: The ability to pay us back, but it's not unusual for this part of the cycle to see a little bit of weakness in a handful of names so with that maybe I'll hand, it over to Julie.
Julie: I don't really have much to add under that.
Julie: Our metrics our delinquency metrics are starting at a very low base. So it doesn't take much for it to pop and.
Julie: We.
Julie: We're staying close to the.
Julie: The borrowers that we think are a little bit under duress and we talk to them constantly we understand what the projects are we're actually quite comfortable even with that loan that we mentioned that we paid off we actually were very comfortable with the loan.
Julie: Our circumstances that require us to categorize it a certain way but.
Julie: I think fundamentally the portfolios actually quite strong.
Okay.
Speaker Change: Perfect. Thanks, everybody for all the color.
Speaker Change: And one moment for our next question.
And our next question will be coming from Steven Alexopoulos.
Steven A. Alexopoulos: Alexopoulos of Jpmorgan Your line is open.
Steven A. Alexopoulos: Hi, everybody.
Steven A. Alexopoulos: Thank you.
Steven A. Alexopoulos: I wanted to start so.
Steven A. Alexopoulos: Jamie.
Alexopoulos: As indicated on the noninterest bearing I thought you said that.
Alexopoulos: Trends moderated in March.
James M. Moses: I'm not sure exactly what you mean by that do you mean that you saw you still saw outflows in March but not to the degree.
James M. Moses: Of January February and I say that because the period end noninterest bearing deposit balances were I think it was $201 million or so below the average so your period end was.
James M. Moses: Down fairly materially.
James M. Moses: Yes.
Speaker Change: Right. So I mean, I think the right way to think about it is most of that outflow happened in January and February and then.
Speaker Change: Then in March it was it was pretty much flat.
Speaker Change: Oh it was flattish in March Okay, Yeah got it you're assuming flattish is that what youre assuming for the rest of the year.
Speaker Change: No actually.
Speaker Change: That one to two basis point guide would assume that say, we were $500 million down say in the first quarter that that that's sort of moderates down to flat by the end of the year.
Got it okay.
Speaker Change: What about the public time.
So you're thinking about that for the rest of the year because those continue to come down too.
Speaker Change: Yes.
Speaker Change: We think that we're going to be able to bring that down in line with the size of the balance sheet.
Speaker Change: Hopefully we have.
Speaker Change: Hopefully that noninterest bearing.
Speaker Change: Moderation that we're talking about hopefully that slows down even more which would allow us to pay even.
Speaker Change: Pay down more of those public time deposits. So.
Speaker Change: The moment, we think that's going to come down and theres going to be need for a little bit of funding in September with the <unk> borrowings and so we're kind of we're going to we'll manage that.
Speaker Change: Sort of like what's best for us in terms of financials right around the rate on those those things. So it's possible that the public time increases.
Speaker Change: In Q3 with the pay down is if it's <unk> or it's possible maybe we'll find some other borrowing source that maybe makes it a little more sense economically for us at that time so.
Speaker Change: The public time really is going to be a function of the extent of the loan growth that we have.
Speaker Change: And the other deposit either growth or declines that we have.
Speaker Change: Okay.
Speaker Change: Helpful and actually I was going to ask on the loan growth.
Speaker Change: Quite a few banks were fairly optimistic with the pipeline. They didn't have a lot of growth this quarter, but they were more optimistic what what are you guys seeing on the pipeline.
Speaker Change: Im talking more commercial C&I pipeline.
Speaker Change: Sure Jesus.
Robert Scott Harrison: Bob So we expect.
Florida came down a little bit this quarter not unusual to have that kind of pop up at year end and come down in Q1. So we think that will have some strength youre seeing production levels.
Jesus: Much higher levels through most of the manufacturers some of the the foreign brands.
Jesus: In particular Toyota has been challenged although I'm sure there'll be catch it up by year end.
Jesus: So thats one area, we are seeing still some deal flow from.
Jesus: Commercial real estate side and in particular deals that we put on a year ago that of course.
Jesus: On the construction side the equity money goes in first and then you start with the draws and so we saw the strength in this quarter and we think that will continue to be some strength.
Jesus: And we're seeing slightly better pricing in the indirect world as well and so we think the the.
The decline in that portfolio will start to moderate.
Jesus: And we'll see where that goes if it makes sense, we want to do that business and it's good business, we know extremely well just the economics for a while.
It makes sense for us so I think really those areas one area that we're not forecasting any real recovery in residential we hope it gets better but that's just a hope thats not a forecast. So we're going to just watch out and be there for our customers as needed, but hard to see a lot of uptick in residential in the back half of this year.
Jesus: <unk>.
Speaker Change: Got it okay.
Speaker Change: Bob if I could ask one other one just on capital you continue to accrete capital pretty nicely here.
Speaker Change: What do you think you go from a share buyback perspective, right because your credit quality overall is pristine.
Robert Scott Harrison: Not sure using capital to grow the balance sheet. So it seems like Youre just going to continue to accrete capital. How do you think about returning some of that to shareholders.
Speaker Change: And great question, and we have the authorization to do that I think the only thing we're looking at now one as we've talked about previously we wanted to kind of get through that uncertainty period or what happened a year ago with FCB and just a lot of questions out there in the market. So I feel that were passed out. So that's the good news is the most important thing.
Speaker Change: Our ratio of across the board not just common equity tier one, but all the other ratios have improved to a point, where that's off the table as I think most people's minds.
Speaker Change: Then the second one is there is a remixing and this we're watching as we remix of the balance sheet out of securities and into loans, obviously, a much higher capital rate going up from 20% to 100%. So it really is looking at that and then.
Speaker Change: If not this quarter certainly the back half of the year, we will be looking closely at that.
Speaker Change: And decide.
Speaker Change: When and if a share repurchase actually putting starting to do some share repurchase makes sense, but.
More likely in the back half of the year.
Speaker Change: Got it.
Speaker Change: Okay. Thanks for taking my questions.
Youre welcome.
Speaker Change: And one moment for our next question.
And our next question will be coming from Timur Brazilian.
Timur Felixovich Braziler: Wells Fargo. Your line is open.
Hi, good morning.
Timur Felixovich Braziler: Maybe circling back Sir.
Timur Felixovich Braziler: Circling back on just balance sheet size.
Timur Felixovich Braziler: So I guess your commentary on continued pay downs of the.
Timur Felixovich Braziler: The public funds and then I guess with the FHA will be borrowing that's coming due in September the expectation there or the willingness there to pay that off or roll that into new borrowings and I guess just more broadly.
Timur Felixovich Braziler: Is there is there an hour I'll call more of the balance sheet growth.
Timur Felixovich Braziler: In the next couple of quarters or do you really need to see some pickup on the lending activity before we should start to see the balance you would actually expand.
Speaker Change: Yes, Hey, Teamers, Jamie I mean, I think I think the last comment you made is probably the right one there right which is.
Speaker Change: Are the size of the balance sheet is really going to be.
Speaker Change: Mostly dependent upon what we do.
On the lending side.
Speaker Change: Feel pretty comfortable for the time being about the.
Speaker Change: The securities portfolio and the runoff associated with that.
Speaker Change: So yes, I think the size of the size of the balance sheet will be sort of dictated on the lending side because that cash flow is pretty certain on the security side.
Speaker Change: The other parts of your question <unk> borrowings. So, yes, so that theres, a chance that we roll that over.
Speaker Change: If needed in September.
Speaker Change: There is also other opportunities in either the public CD market or or even when our retail.
CD market. So at that point, it's going to be kind of a kind of dependent upon the economics of what we what we see.
Speaker Change:
Speaker Change: There are there are potential reasons to either roll that over or to do public public time deposits at that time so.
Speaker Change: We'll think we'll think through that for sure.
Speaker Change: Okay. Thanks, and then just circling back on credit it looks like a large portion of the increase in criticized loans.
Speaker Change: And the multifamily construction.
Speaker Change: Alright, and you have a footnote in here, saying that it's centered around rental and for sale housing I guess, just maybe more broadly what occurred in that portfolio and to what extent is the tourism.
Speaker Change: Kind of driving that result, any kind of additional quality you can provide there would be helpful.
Robert Scott Harrison: Timur this is Bob.
Timur: That loan in particular and Youll see it on page 16.
Robert Scott Harrison: Multifamily construction it was a mainland deal it's a very strong sponsor they stepped up to the plate and paid it off and so the criticized portion there is zero as of today.
Robert Scott Harrison: To give you an idea so more broadly in the portfolio as we've looked at for deals we do on the mainland we look first to the sponsor as well as the agent Bank and make sure those two are our.
Bob Harrison: People, we want to work with.
Not every deal works out exactly as we planned and you just need to work through some of them and that's what we did in this case so more broadly we are still very.
Bob Harrison: Comfortable with the strategy, we're still very careful on which markets. We go into with sponsors we work with and which agent banks, we want to.
Speaker Change: Partner with on that does that answer your question.
Speaker Change: That does yes, and then maybe just a follow up there just.
Speaker Change: Can you give us the geography that loan was that and then maybe just some broader commentary about what you're seeing in the mainland portfolio.
Speaker Change: Yeah.
Speaker Change: The California market and.
Speaker Change: Again those are the gateway cities, we've been talking about for some time ever since we started the strategy.
Speaker Change: And that's why it is it was able to get refinanced.
Speaker Change: We got paid off just because of the strength of the project.
Speaker Change: Even there are some weakness in some of those markets, we yesterday very specific about even within.
Speaker Change: Some of those gateway cities, exactly where youre doing the deal and where the deals are being done and even the submarkets are all very important in building that expertise and being able to execute on that is really what drives a lot of the credit quality as well.
Speaker Change: Great. Thanks for the questions.
Speaker Change: And one moment for our next question.
Speaker Change: And our next question will be coming from Jared Shaw of Barclays. Jared Your line is open.
Jared David Wesley Shaw: Hey, good morning. Thanks.
Jared David Wesley Shaw: Yes.
Jared David Wesley Shaw: Maybe just first on Maui, what's the remaining expected insurance.
Jared David Wesley Shaw: Benefit.
Jared David Wesley Shaw: Our payment.
Jared David Wesley Shaw: From from <unk>.
Jared David Wesley Shaw: Semi claims or is that all tied up with what we saw this quarter.
Jared David Wesley Shaw: So yes, so just to be just to be very clear about what that what that insurance benefit was that was insurance on our building on our on our branch that.
Jared David Wesley Shaw: That burned down and so we have that.
Jared David Wesley Shaw: That was that insurance claim for this quarter for us from US and then on the deposit side that where that was claims that came into that was claims money that came into the bank that got paid out in the quarter.
Jared David Wesley Shaw: Two recipients so.
Speaker Change: Just want to clarify those two comments and then.
Speaker Change: And if that didn't address your question and then maybe if you could ask it again that we can.
Speaker Change: Either you or Bob can handle yes, I think thats. It so that that $2 million that you called out for the branch, there's really no other HB claims.
Speaker Change: Outstanding then that's the way to think of it.
Speaker Change: There will be once we start the actual rebuild.
Speaker Change: Okay.
Speaker Change: Be farther out so, but that's kind of the initial and then as time goes by and it's hard to determine when that will happen.
Speaker Change: Or specifically the amounts at this point in time.
Speaker Change: Okay alright. Thanks.
A follow up.
Speaker Change: There is a.
Speaker Change: A competitor bank Thats been the news lately with apparent that's struggling a little bit.
Speaker Change: What's your.
Speaker Change: Or do you have any thoughts on how that could impact the market is that an opportunity for you to either take market share.
Speaker Change: Or or protect market share.
Speaker Change: Would you envision.
Speaker Change: Yes situation, where potentially a new.
Competitor would come on to the islands and be in the market or do you think that.
Speaker Change: A disposition there would likely involve Hawaii banks.
Yes, Joe.
Speaker Change: We prefer not to speculate on that and that's very much kind of just wait and see how that plays out.
Speaker Change: So.
We don't have any comment on that one.
Speaker Change: Okay alright. Thanks.
Speaker Change: And one moment for our next question.
Speaker Change: Our next question will be coming from Andrew Liesch of Piper Sandler Andrew Your line is open.
Thanks, everyone. Just one quick question from me you've covered everything else.
Andrew Brian Liesch: You have the balance of shared national credits and how is the credit quality performing in those right now.
Andrew Brian Liesch: So we do have the balance of shared national credit.
Speaker Change: So we actually sorry.
Andrew Brian Liesch: We actually divide the portfolio up into credit only versus non credit only.
Andrew Brian Liesch: So the outstanding balance on the credit only snakes at the end of this quarter was $324 million.
Andrew Brian Liesch: And how is the credit quality standing up.
Andrew Brian Liesch: There's been some weakness admittedly, but.
We do have expectations for resolutions on those none of them are on non accrual or anything there just incorporating it into our table on slide 15.
Got it.
Speaker Change: Yeah, absolutely really helpful and things so you've covered everything else I'll step back.
Great.
Yes, just a little broader context, maybe because obviously the portfolio is much larger and we kind of we have different cuts on the first cut at Hawaii based shared national credits versus mainland shared national credits and then within the mainland base shared national credits is the ones that really have a presence here in Hawaii.
Speaker Change: We have a broader relationship with and there are some that deploy some of our excess capital liquidity.
Speaker Change: Sure.
Speaker Change: Credit only as we call it and that's what we're referring to.
Speaker Change: Got it thank you.
Speaker Change: And one moment our next question.
Speaker Change: And our next question will be coming from Kelly Motta of <unk>. Your line is open.
Kelly Ann Motta: Hi, Thanks, so much for the question I apologize I got dropped off the call. So I apologize. If this has been asked.
Kelly Ann Motta: Already but.
Kelly Ann Motta: Quarter. There was there was quite a nice uptick as well.
Kelly Ann Motta: Neil I'm wondering.
Kelly Ann Motta: You are really good call out.
Kelly Ann Motta: At this point impact.
Kelly Ann Motta: Sort of one one time benefit on margin just wondering.
Neil: If there is any of that in the loan yields may be there is nonaccrual recoveries or anything that would be helpful. When.
Neil: Consider when when modeling.
Neil: The margin is not bad.
Yeah, Thanks, Kelly Jamie.
Neil: That was a that three basis points that was on the loan side of things and in particular was in the residential mortgage bucket.
Neil: It was related to kind of like the timing differences I would say in deferral take ups related to related to Maui.
Neil: And so we had some catch up interest that happened in Q1 that was about $1 5 million. So that was like a nonrecurring piece of that in Q1.
Speaker Change: Got it that's helpful. I'll step back thank you so much.
Speaker Change: Yep.
Speaker Change: And I would now like to turn the conference back to Kevin <unk> for closing remarks.
Kevin: Thank you Tanya.
Kevin: We appreciate your interest in first Hawaiian.
Kevin: Please feel free to contact me if you have any additional questions. Thanks again for joining us and have a good weekend.
And this concludes today's conference call. Thank you for participating you may now disconnect.
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