Q1 2025 First Hawaiian Inc Earnings Call
Thank you for standing by and welcome to the First Hawaiian Bank First Quarter 2025 earnings conference call. At this time, all participants are in listen only mode. After this speaker's presentation, there will be a question and answer session.
To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered, and you wish to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded.
Speaker Change: And now I'd like to introduce your host for today's program, Jamie Moses, CFO . Please go ahead there.
Speaker Change: Thank you Jonathan and thank you everyone for joining us as we review our financial results for the first quarter of 2025. With me today are Bob Harrison, Chairman, President and CEO and Lee Nakamura, our Chief Risk Officer.
Speaker Change: 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 fhb.com in the Investor Relations section.
Speaker Change: During today's call, we will be making forward-looking statements so please refer to slide one for our safe harbor statement
Speaker Change: We may also discuss certain non-GAAP financial measures. The appendix to this presentation contains reconciliation of these non-GAAP financial measurements to the most directly comparable gap measurements.
and now I'll turn the call over to Bob.
Bob Harrison: Hello everyone. I'll start by giving a quick overview of the local economy.
Bob Harrison: Overall, white economy remains stable, but uncertainty is increasing due to recent weakness around international rivals and the lack of clarity about consumer confidence.
David Feaster, Timur Braziler,
Bob Harrison: statewide seasonally adjusted unemployment rate remained stable on February at 3% compared to the national unemployment rate of 4.1%
Bob Harrison: Two February Total Visor arrivals were up 1% and spending was up 4.5% compared to 2024 levels.
Bob Harrison: Maui has seen the largest increases in arrivals and spend among all the islands in the world.
also the housing market remains stable.
Bob Harrison: Turning to slide 2, we continue to perform well in the first quarter.
Non-interesting come with stable and expenses remained well-controlled
Bob Harrison: declining to part of the cost and the fourth quarter investment portfolio restructuring helped that drive a five basis point increase in them.
Bob Harrison: And then finally, credit quality remained excellent, and we added to the reserves to increase macroeconomic uncertainty.
David Feaster, Timur Braziler,
Bob Harrison: Turning to slide 3, the balance sheet remains solid and we are well positioned to support our customers.
We continue to be well capitalized with ample liquidity.
Bob Harrison: During the first quarter, we repurchased about 974,000 shares at a total cost of 25 million.
Bob Harrison: and we have $75 million remaining authorization under the approved 2025 Stock
Bob Harrison: Turning to side four, total loans declined $115 million or 0.8%.
Bob Harrison: from the prior quarter. The client was primarily due to commercial real estate loans, where we experienced both scheduled and early payoffs at a few large credits.
Bob Harrison: Growth within the CNI performance was partially offset by the normal fluctuations in dealer flooring which declined by $28 million.
Now I'll turn it over to Jamie.
Jamie Moses: Thanks Bob. Turning to slide five, while total deposits declined slightly in the first quarter, we were pleased with the underlying performance of the retail and commercial deposit basis.
Jamie Moses: Retail deposits increased $105 million in the quarter, while commercial deposits more than an offset that falling by $167 million.
Jamie Moses: The decline in the commercial book was largely due to normal fluctuations in a few of our larger accounts, but we're not reflective of any larger underlying trends
Jamie Moses: Our total cost of deposits fell by 11 basis points as the benefit from the Q4 rate cuts was fully priced in as well as the repricing trends from approximately $1.4 billion of CDs in the first quarter.
Our non-interest bearing deposit ratio remained an enviable 34% [inaudible]
Jamie Moses: On slide 6, we see how the deposit performance benefited net interest income and the margin in the quarter.
Jamie Moses: Net interest income was $160.5 million, $1.8 million higher than the prior quarter.
Jamie Moses: The increased NIM in the first quarter was a result of those lower deposit costs and the benefit from the Q4 investment portfolio restructuring, which taken together offset some of the effects of the decline in the yield of our floating rate loan portfolio.
Jamie Moses: Looking ahead, the underlying balance sheet dynamics driving the NIMM remain intact, and we anticipate that the NIMM in the second quarter will increase a few basis points to 3-10
Jamie Moses: I want to also point out that given the current macro environment, the level of uncertainty around our outlook has increased.
Jamie Moses: Turning to slide seven, non-interest income was 50.5 million dollars and non-interest expenses were 123.6 million [inaudible]
Jamie Moses: There were no significant non-recurring, non-interest income or expense items in the quarter, and our full year outlook for both of those lines remains the same.
Jamie Moses: and now I'll turn it over to Lee. Thank you, Jamie. Moving to slide 8, the bank maintains its strong credit performance and healthy credit metrics in the first quarter. Credit risk remains low, stable, and well within our expectations. Thank you.
Jamie Moses: We're not observing any broad signs of weakness across either the consumer or the commercial books.
Jamie Moses: Classified Assets, Decreased by $3 million, due primarily to pay-downs. Your date net charge offs were $3.8 million, and our annual year-to-date net charge off rate was 11 basis points.
Jamie Moses: Non-performing assets and 90-day pass due loans came in at 17 basis points at the end of the first quarter, down to basis points from the prior quarter.
Jamie Moses: Moving to slide 9, we show our first quarter allowance for credit losses broken out by disclosure segments.
Jamie Moses: The bank recorded a $10.5 million provision in the first quarter. The asset ACL increased by $6.2 million to $166.6 million, with coverage increasing 6 basis points to 117 basis points of total loans and leases. The asset ACL increased by $10.2 million, with coverage increasing 6 basis points of total loans and leases.
Jamie Moses: The Reserve billed reflect the more pessimistic forecasts available to the economic forecasting component of our Cecil model.
Jamie Moses: We believe that we are conservatively reserved and ready for a wide range of outcomes
Bob Harrison: Let me now turn the call back to Bob for any closing remarks [inaudible]
Speaker Change: Thank you, Lea. Thank you, Jamie. Now we'd be happy to answer any questions.
Speaker Change: Certainly, and as a reminder, if you have a question, please press star, one one on your telephone. Our first question comes from the line of David Feaster from Raymond James. Your question, please.
Hey, good morning, everybody.
Thank you.
Speaker Change: I wanted to start on the loan side. I appreciate some of the commentary on in the release and what you alluded to about just the strength of the economy. I'm curious maybe starting with the pulse of your clients like
How is the pulse of your car? Obviously there's a ton of uncertainty, but just curious again about the pulse of the economy. How's the pipeline shaping up?
Speaker Change: Expectations for pull-through and just, you know, you know, how much of that decline, you know, in CRE, this quarter was, you know, driven by that weaker demand or how much pay us and pay down. Big question, sorry.
Speaker Change: No, no, that's a great question, Dave. Thank you. Let me start on that and Jamie Lee have comments. We'll let them certainly join in.
Speaker Change: You know, actually, average loans for the quarter was up, over Q4 [inaudible]
Speaker Change: So, it really was just a few things during the quarter. We participated along the way every day in Q4, we participated out in Q1, just kind of normal stuff.
Speaker Change: The dealer paydowns is very typical to see it build up at your end and then some of that come off in Q1 and then we had some other paydowns so you know there wasn't anything in
Speaker Change: Q1 that we thought was unusual. We do think that and we are seeing the pipeline being pretty strong out there, but you know there's more uncertainty in the market. I mean that you heard that with Liesch comments. The model lane is.
Speaker Change: is modeling in a little bit more uncertainty. So, we think it's fine, but we certainly can't tell what's going to happen in a little bit.
Speaker Change: The back half of the year. We think there's opportunity there, everything else being normal.
Good.
Speaker Change: Okay, that's helpful. And then maybe touching on the on the on the other side of the balance sheet on the deposit side you guys had a lot of success, you know repricing deposits and and doing some remixing obviously there's some seasonality this quarter. I'm just kind of curious maybe the competitive landscape on the deposit front how much you know leverages there left for you to continue to reduce deposit costs. [inaudible]
Yeah, just going to curious what you see in there.
Speaker Change: Yeah, hey David, Jamie, I guess what I think is that when we see rates continue to decline we'll still have opportunities to also bring down those deposit costs as well
Speaker Change: We've had a pretty strong beta from a downturn perspective and I think that that beta begins to, you know, decelerate, but still exists.
It's tough to go much lower than 143.
Speaker Change: from this point, versus being at 2% or something like that. There's a lot more room from that perspective. Also, we pride ourselves on having full relationships and really grabbing those operating accounts from folks.
Speaker Change: and so having more DDA also limits our ability to reduce rates even further, but I don't think we want to apologize for that. I think that we have pretty good deposit performance and we're happy with how that's working out for us.
Speaker Change: Absolutely. Sorry, the only thing I would add to that is, you know, we're very pleased with the increase in the retail deposits of 100 million. That's really shows that we're out there because the teams are out there serving their customers and growing their relationships.
Speaker Change: There's, you know, that literally a handful of large commercial accounts is-
Speaker Change: They're all so great customers as far as it just inflectuations at the end of the quarter when negative instead of staying stable or going up. So, you know, we were concerned about the drop on the commercial side either.
Jamie Moses: Absolutely. So if I'm here in you, Jamie, excuse me, the rate cuts, not a ton of, you know, room that would be the top, if you will, on the deposit cost side.
Jamie Moses: Yeah, I think that's right. There's some ability still related to CD reprisings that we have in the second and third quarters, but apart from that, I don't think there's a whole lot for us to really be able to do there.
Jamie Moses: Can you remind us what those roll-off rates are from where you're pricing new cities?
Jamie Moses: Yeah, so it fluctuates a little bit, but we're probably getting 20 to 30 basis points in total spread on that repricing.
Okay, awesome
Speaker Change: And then just the last question I wanted to touch on was on the expense side, you know, you came in better than expected here in the first quarter You know, seasonally, you know, there's some headwinds right with FICA bonuses raises and all that kind of stuff, but still reiterated the guidance at 510. Could you just maybe have a look at that?
Jamie Moses: Touch on the trajectory over the course of the year, where you're investing in, and maybe some projects are just kind of how you think about expenses this year.
Jamie Moses: Yeah, I think we're always looking to invest in the business and into our people, right? That's an important component to us, maybe the most important component for us.
Jamie Moses: So I think that we just, there was some slowness in the first quarter in expenses and we expect that that should ramp up over the year but I committed to staying within the guidance that we gave.
Jamie Moses: You know, I think to the extent that there are other opportunities, there, there's, you know,
Jamie Moses: Some projects and things that we might put in the queue that can generate ROI for us in the coming years, but we want to make sure that the outlook, we're a little more certain of the outlook.
Jamie Moses: before we make those kinds of investments. So, it's really a combination of those things. You know, going to keep the guidance the same for now. And, you know, there are obviously possible levers, you know, depending on what happens out in the world.
Speaker Change: Yeah, and this maybe just add a little bit to that, you know, as we talked about in the past, we
Speaker Change: kind of did the big tech spend over the last several years so there's always projects that we're working on and certainly in data analytics and other areas that we're trying to provide value to the
Speaker Change: The line folks have better do their jobs and take care of our customers but it's not on the scale that we've had in previous years which allows us to kind of keep our guidance where it is and work you know maybe one quarter a little below but we're still keeping that guidance [inaudible]
Okay, that's helpful. Thanks everybody.
David Feaster, Timur Braziler,
Speaker Change: Thank you, and our next question comes from the line of Jared Shaw from Barclays. Your question, please?
Take good morning.
David Feaster,
Speaker Change: When I'm looking at the growth and the allowance, and you can mention sort of the qualitative overlay there, once...
Speaker Change: If we assume that you hero sort of catches up to the
Speaker Change: The expected slower visitor arrivals. Do you just feel like that's that the qualitative overlay is a sort of loading some of that, or could we expect to see the ACL ratio go up if the if the U-Hero deteriorates?
Speaker Change: So, it's not the qualitative overlays, the quantitative portion of the model that generated that increase.
Speaker Change: So we do put in more than just you hero, it's a multiple of factors [inaudible]
Speaker Change: So it's it's hard to say what what will happen with the coverage ratio
Speaker Change: One of the things that actually happened during the quarter was this Bob that changed a little bit as we saw better performance on Maui and so now we're reducing some of that qualitative overlay and you know other things are kicking in to Lee's point.
Speaker Change: So, you know, there's a lot of different factors in that one [inaudible]
Speaker Change: Okay, all right, that's great. Thanks. And then how could you just sort of walk through the some of your thoughts around the floor plan businesses exposure to tariffs.
Speaker Change: And, you know, if we do end up seeing significantly higher pricing for imported cars, is that how does that serve impact the dynamic of floor plan, either balances or credit or growth there?
Speaker Change: Sure, no. Great question. And we ended the quarter floor plan at...
Speaker Change: 661 million so that's certainly up off the base and well below the all-time highs but business is different now. I guess I would start with the dealers and certainly our dealers are very good business people and we saw this during COVID that they were able to really pivot.
Speaker Change: and moved from selling new cars and selling used to doing service and just seeing their cost structure. So from a credit perspective,
Speaker Change: Never say never, we're not, but we're not, we don't have any concerns out there on the credit [inaudible]
Speaker Change: Regarding the balances, that's just going to be a factor of.
You know, what's happening with tariffs.
Should they be put in place? [inaudible]
Speaker Change: What we saw and what we're hearing and reading, like everybody else, is that there was some pull through at the end of the third quarter and maybe into April of people maybe doing purchases in anticipation of that and wanting to get the car they wanted now.
Speaker Change: There's still a lot of uncertainty if the terrorists will stick on what countries will be applied, is it to the subsidiary parts or not? How that works? The other factor we haven't heard anything about is what manufacturers will do to support the dealer network. [inaudible]
Speaker Change: You know, that's just an unknown. Will they be there to support the dealer network? Will they pass through the cost? All these things are going to become clearer over the next weeks and months.
Speaker Change: So we're very comfortable with credit, they're good operators, we'll just have to on the balances side we'll just have to see how that plays out to be candid.
David Feaster, Timur Braziler,
Great, thanks a lot, Bob.
Speaker Change: Thank you, and our next question comes from the line of Kelly Motta from KBW. Your question please.
Hey, good morning. Thanks for the question guys.
Kelly Mata: I think maybe turning to deposits, can you remind us the seasonal trends there and what we should be expecting in the upcoming quarter given?
Whatever Linus that you have into that, thanks. [inaudible]
Kelly Mata: Sure, thanks Kelly, it's Jamie. So as we would expect there should be some tax implications in the first quarter as folks pay taxes and so draw down some...
Kelly Mata: Some balances. What we've seen in the past is that really the back half of the year is where the where the deposits start to build. What's different is that with different for us this. [inaudible]
Kelly Mata: Quarter, which would make it a little bit tough to sort of prognophicate at the moment.
Kelly Mata: is that we did see that really good increase in retail deposits in the first quarter. And so it really kind of just depends on how those sort of trends play out relative to the commercial deposits, right? So...
Kelly Mata: We mentioned earlier, we have some accounts that have...
Kelly Mata: Large fluctuations on a normal basis, and so kind of depending on where the quarter ends, you know, they're either up or down, but you know, I think in general we're seeing good net account growth
Kelly Mata: We're seeing good customer growth and that's a credit to our retail teams. They're doing a great job out there in the streets just making connections and servicing our customers.
Kelly Mata: just part of what we do and we're generally pretty happy with where that's going. So.
Kelly Mata: And in the only Kelly's pub, the only thing I would add to that is similar to the loans. The average deposits for the quarter were up over the fourth quarter so this is kind of a normal fluctuation and mix.
Kelly Mata: What that tells us about the feature is a little less clear given the uncertainty and, you know, the market conditions, etc. But the kind of be still growing, great production by the retail teams is James Point.
Speaker Change: Got it. That's helpful. And I guess maybe maybe the last question from me. It looks like average cash balances for elevated a bit in the quarter.
Speaker Change: Timed that in with your commentary just now about deposits potentially being grossing, potentially picking up in the back half with seasonal trends.
Speaker Change: Would you expect the overall size of the balance sheet to grow, commensurate with that, or are you still funding some of the potential on growth with?
Thank you. Thank you.
Speaker Change: Cash flows off the securities book, just trying to round out.
Speaker Change: to get a good sense of the size of our cheat. Thanks.
Speaker Change: Yeah, yeah, that's great, Kelly. Good question. I think the answer is that you actually hit it on the head, which is that I...
Speaker Change: To the extent that our deposits are growing, the size of our balance sheet will grow along with that. There's a chance that maybe those cash balances were a little bit elevated, and so the size of the balance sheet may be slightly smaller, but sort of the efficiency of that balance sheet should be better.
Speaker Change: So in terms of NEI, if that's what you're thinking about, I think that's probably exactly the right way to think about it [inaudible]
David Feaster, Timur Braziler,
Speaker Change: Great, thank you so much for the color today, I will step back, nice quarter guys.
Thanks, Kelly.
Speaker Change: Thank you, and our next question comes from the line of Anthony Elian from JP Morgan. Your question, please.
Anthony Elion: Hi everyone, just following up on Lone Growth, do you think second quarter could be a growth quarter for total loans, and then what are you expecting on a full year basis, still that low-to-mid single digits range?
Bob Harrison: I'm Margaret Tony at this spot so I guess well first of all start with the full year we haven't changed our guidance
Bob Harrison: There's uncertainty out there, but we still think there's an opportunity to get to a little bit of single business, depending on what happens in the economy, again subject to
Bob Harrison: Tara, so the earlier discussion on any impact on the other dealers, etc., but...
Bob Harrison: We're so optimistic on that. As far as Q2, it's a little harder to see there's a number of loans in the pipeline. One thing that uncertainty does create is probably fewer of the construction loans being refinanced.
Bob Harrison: There is a number of deals in the pipeline. We just hard to pin which quarter we think the growth will be in throughout the rest of the year.
David Feaster, Timur Braziler,
Speaker Change: Okay, and then my follow-up, you provide a good color on the dealer, floor plan, a low-emportfolio and not concerned about the credits there. Are there any other low-emportfolios more broadly, or maybe paying a closer attention to given the heightened exposure to terrorists, manufacturing, supply chain, anything like that? Anything proactive you're doing now on those portfolios? Thank you.
Speaker Change: Yeah, great question. You know, the kind of broad base of CNI is something we're also staying close to our customers on CNI ex-deal it, which we talked about earlier. You know, it's just a variety of businesses in there and the impact of what's happening with...
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Speaker Change: Not so much terrorists with large and we don't have any industries that are directly infected but a lot of small businesses are obviously going to be impacted by it.
Speaker Change: Higher cost associated with goods that are imported from somewhere else. [inaudible]
Speaker Change: And so that's something that the credit teams and the line are spending a lot of time talking about just to stay close to those customers. Nothing in service yet to leaves earlier comments. That is something just a heightened awareness for us.
Speaker Change: Anthony, just to add just quickly to that, you know, the credit, the credit and risk teams, they feel really strongly that the impacts of tariffs and other disruptions.
Speaker Change: is sort of really customer dependent, not necessarily biportfolio. And so this is where it's really helpful that we have such strong relationships with our borrowers that we're able to really be tight with them and really understand their businesses so that we can really understand what those impacts are and work through and with them. [inaudible]
and throughout the course of time.
Thank you.
Speaker Change: Thank you, and our next question comes from the line of Andrew Terrell from Steven's. Your question please.
Thank you. Thank you.
Speaker Change: Hey, good morning. Jamie, if I could just start on the margin. Would you happen to have this spot deposit cost at the end of the period, and then maybe the margin of the month of March? Yes, spot deposit cost was $141 and the margin in March was $310.
David Feaster, Timur Braziler,
Got it. Okay.
David Feaster, Timur Braziler,
Speaker Change: So embedded in our forecast is that there's going to be a rate cut in June . And so that 310 guidance that I'm giving is, you know, inclusive of that as well. And so that's why maybe it, you know, it seems like it's not expanding off of March, that's the reason.
The rate cut in the forecast would offset that. The rate cut in the forecast would offset that.
Speaker Change: Got it. Okay. Yep, that was exactly where I was going next. I appreciate it. Um, yes.
Speaker Change: And then could you just remind us on the on the buyback you know saw you guys were active this quarter this past quarter there's obviously a bit of volatility in the market just you know expectations run the buyback moving forward and specifically you know any any interest and maybe accelerating the pace of buyback given some of the volatility we've seen.
Yeah, I mean, you know, I think that there's definitely
Speaker Change: You know, interest when the price is lower, right? But, you know, I think the way to think about it and the way that we're trying to be, you know, real careful and think about it is that, you know, this is a program that we have in place and we're trying to do things very programmatically. [inaudible]
Speaker Change: That doesn't necessarily mean that there won't be acceleration of the by-back when we see opportunities.
Speaker Change: But just broad-based when we're thinking about it, you know, we're thinking about this [inaudible]
Speaker Change: Not trying to time markets and things like that, we're just, we're really trying to just put this program in place to return capitals to the shareholders. So it's possible, but I, you know, I would, I would think that, you know, it's more likely that 25 for quarter kind of thing is where we're more looking at.
Understood. Thanks for having the questions.
Yep.
Speaker Change: Thank you, and our next question comes from the line of Andrew Liesch from Piper Sandler. Your question please.
Andrew Leach: Thanks. You're just a quick question to follow up on the margin commentary here. So you're going to be three ten from the second quarter. How quickly can you offset any rate cut? So if we look out further into the year, is it?
Andrew Leach: Can you offset the rate cut in the third quarter and keep the margin flat at 3.10 or is there going to be an initial drop? I know you have a fair amount of acid repricing.
Andrew Leach: That's still going to be at a positive differential. So do you think you can hold the margin flat or do you think that margin will be blew down a quarter?
[inaudible]
Andrew Leach: You know, I think that's going to be dependent upon our loan growth, and so if we're able to grow loans at a very good clip, then there's a chance that we can fully offset that in a quarter. If not, then maybe you'll see a small decline, but then you should continue to see a general march higher when those repressing dynamics continue. You know, I think that's going to be a good clip, but then you'll see a general march higher when those repressing dynamics continue.
Andrew Leach: So it's tough to say without knowing all the moving parts around that but as we said there's opportunities in our rate-tensitive deposits and then we have the CDs that also reprise.
Andrew Leach: in the second and third quarter. So, you know, I feel confident that we, once we hit a...
We hit a rate cut.
Andrew Leach: We reprised things, it's obviously lower, but then we have the ability to then drive it higher. So those those fundamentals are still remain intact.
Speaker Change: Got it, thank you. And then just to follow up question, what's the tax rate we should be using?
here.
23% we think is a good number for the year.
Speaker Change: Got it. That's that's all my questions. It's covered everything else. Thanks
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Speaker Change: Thank you, and our next question comes from the line of Timur Braziler from Wells Fargo. Your question, please.
Timur Braziler: Hi, good morning. Starting big picture for me, just looking at tariffs, I guess where could tariffs potentially be more multiplicative for Hawaii, given that there's just more stops along the way for things to reach the island. And then Bob, maybe you can help frame the risk both from the tariffs and what's slowing visitor arrivals could pretend for the kind of economy.
Speaker Change: Timur Morning, I guess from Broadway from Terrace, Jimmy touched on it a bit earlier, we don't have businesses that are...
Speaker Change: You know, doing manufacturing that you're seeing things come in, I guess one of the concerns would be, we didn't touch on this yet, so very good question would be in construction or you seeing higher raw material costs or you know, where could that take us.
Speaker Change: No projects have been canceled by any of our customers. The developers are of course working.
Speaker Change: closely with, you know, contractors to make sure that, you know, the prices are solid before they launch into a project. So that's more of a look forward opportunity that creates a little bit of uncertainty around that.
Given the importance of strength of construction, why that's...
Maybe the area that you'd look to, but uh...
Speaker Change: We have some pretty conservative contractors too. I know of one that whenever they bid a job, then they get awarded they buy all the materials right then to make sure they lock in their costs. So it really depends
on the customer and the situation.
Jamie Moses: But clearly if there's a dramatic increase in construction material costs that are some of which are imported, that could in the future affect construction.
Jamie Moses: Various C&I loans of customers, you know, we're just staying close to people on that. Maybe the last thing is as it affects tourists and I think it was the last part of your question.
Jamie Moses: Haseyama, James Moses, Robert Harrison, Lea Nakamura, Robert Harrison, Lea Nakamura, James Moses, Robert Harrison
Jamie Moses: Less willing or more reluctant to travel to the US which could include Hawaii as well But we're seeing the tiny bit in the numbers through February but you know the numbers haven't come out yet for March and you know future bookings is
Anybody's guess? So that's something we're watching closely esteemed.
Staying close contact with the hospitality customers
Did that answer your question?
It does, yeah. Thank you.
Jamie Moses: and then I guess a second for me looking at the reserve build, this quarter.
Jamie Moses: It seems like, you know, much of that was driven by the Consumer Portfolio. I'm just wondering in kind of just some broader thoughts around your consumer exposure and just the thought process of building that reserve over these last couple of quarters.
So, it was...
Jamie Moses: Again, driven by the economic forecasting model, and then how it gets allocated out.
Jamie Moses: I know what slide you're looking at, but how it gets allocated out is then a different methodology overall consumer. We haven't seen the kind of deterioration that one might have expected based on the
Jamie Moses: The forecasts that are being fed into the model, so it's performing well for us still. We are concerned about it because, you know, as your questions indicate, you know, who I is vulnerable to TARA decreases in federal spending, etc.
Jamie Moses: But so far, consumers hold out even though we're again another thing to watch very closely.
So many different things to watch closely now.
Jamie Moses: Yeah, and maybe it's worth mentioning, thanks Lee, maybe it's worth mentioning on the federal spending.
Jamie Moses: The Defense Secretary stopped by on his way to Asia, made a very strong statement that, you know, the Indo-Pacific Command is going to...
Jamie Moses: remains fully funded given its mission here in the Pacific and all the way through India. That doesn't mean there won't be impacts. There's a number of other things the federal government is looking to reduce costs on that will affect Hawaii but kind of the largest driver in of itself, which is Department of Defense in the Pacific Command.
Jamie Moses: Appears to be a lease on most recent statements as of whatever it was week 10 days ago that won't be subject to any cuts [inaudible]
Great.
Thanks for that.
Jamie Moses: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to JB Moses, CFO for any further remarks.
J.B. Moses: Okay, thanks Jonathan. We appreciate your interest in First Hawaiian and please feel free to contact me or Kevin Haseyama our Investor Relations Director if you have any additional questions. Thanks again for joining us and have a great rest of your week.
J.B. Moses: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect today.
and all of you. Thank you. Thank you.