Bank of Hawaii Corp (BOH) 2011 Q1 法說會逐字稿

Good day, Ladies and Gentlemen. Welcome to the first quarter 2011 Bank of Hawaii financial results call. My name is Larry and I will be your Operator today. At this time all participants are in a listen only mode. Later we will conduct a question and answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Ms. Cindy Wyrick, Director of Investor Relations . Please

Thank you, Larry, and good morning, everyone. Thank you all for joining us today as we review the financial results for the first quarter of 2011. Joining me this morning is our Chairman, President and CEO, Peter Ho; our Vice Chairman and Chief Financial Officer, Kent Lucien; and our Vice Chairman and Chief Risk Officer Mary Sellers. Comments today will refer to the financial information that was included in the earnings announcement this morning.

Before we get started, let me remind you that today's conference call will contain some forward-looking statements. And while we believe our assumptions are reasonable, there are a variety of reasons that the actual results may differ materially from those projected. And now I'd like to turn the call over to Peter.

Great. Thanks, Cindy. Good morning, everyone. Thanks for joining us today. Bank of Hawaii had a solid earnings performance in the first quarter of 2011. Deposits continue to grow. Our loan balances are stabilizing. Our net interest margin improved in the quarter. And our asset quality is improving along with the overall Hawaiian economy. Our balance sheet and capital remain strong and we maintained our high levels of liquidity and reserves.

As usual, I'll ask Kent to review some of the factors affecting our financial performance this quarter, and then Mary will comment on our credit quality measures. Kent?

Thank you, Peter. Good morning. Net income for the first quarter was $42.4 million or $0.88 per share, compared to $40.6 million or $0.84 per share in the fourth quarter of 2010, and $52.7 million or $1.09 per share in the first quarter of 2010. This quarter, we realized $6.1 million in gains from the sell of securities in our investment portfolio compared to $20 million in the first quarter of 2010. There were no securities gains in the fourth quarter. Our return on assets in the first quarter was 1.32% and return on equity was 16.9%. Our efficiency ratio was 56% this quarter.

Our net interest margin in the first quarter was 3.24% compared to 3.15% in the fourth quarter and 3.72% in the first quarter of 2010. Our higher margin was primarily due to higher yields in our investment portfolio. Market rates were slightly higher in the first quarter. The credit provision in the first quarter was $4.7 million compared to $5.3 million in the fourth quarter and $20.7 million in the first quarter of 2010. The credit provision for the first quarter and fourth quarter equaled net charge-offs. Gross charge-offs were $7.4 million compared to $15.7 million in the fourth quarter. The credit provision for the first quarter of 2010 included a $2.7 million increase to the allowance. Our allowance for loan and lease losses at the end of the first quarter remained at $147.4 million or 2.8% of outstanding loan and leases. Non-performing assets were $34.6 million at the end of the first quarter, down $3.2 million from the end of the fourth quarter, and down $7 million from the end of the first quarter of 2010. Included in non-performing loans were $24.4 million in residential mortgage loans. While our credit metrics continued to improve, we are still cautious, especially in light of the crisis in Japan, as well as higher oil prices.

Non-interest income for the first quarter was $53.9 million, up from $51.5 million from the fourth quarter and down from $71.8 million in the first quarter of 2010. The increase from the prior quarter was primarily due to $6.1 million realized gains in the portfolio, partially offset by lower overdraft fees and mortgage banking income. The decrease from the first quarter of 2010 was primarily due to a $13.9 million decrease in realized gains in the portfolio and lower overdraft fees. Overdraft fees were $1.7 million lower and mortgage banking was $1.4 million lower compared to the fourth quarter. Non-interest expense totaled $86.1 million in the first quarter, down from $88.7 million in the fourth quarter and up from $81.7 million in the first quarter of 2010. The decrease from the prior quarter was primarily due to fourth quarter items that included a $1.9 million accrual for our cash bonus program, a $1.2 million accrual for a personal computer refresh program, and $1 million contribution to the Bank of Hawaii Foundation. Partially offsetting these were a $1.3 million gain on the sale of foreclosed real estate and a $1 million settlement gain on the settlement of retiree life insurance obligations.

Salaries and benefits were $2.2 million higher compared to the first quarter of 2010 due mainly to higher pension expense for our frozen defined benefit plan because of a lower assumed discount rate. Also, FICA and unemployment taxes were higher associated with year-end 2010 bonuses. Actual salaries were slightly lower as compared to last year. The effective income tax rate was 32.6% in the first quarter compared to 24.5% in the fourth quarter and 31.5% in the first quarter of 2010. The increase compared to the prior quarter was due to the fourth quarter release of reserves from tax years under audit by the IRS for the LILO and SILO issues. Our investment portfolio now stands at $6.5 billion and we have unrealized gains in the portfolio of $43 million. We repositioned at fair value approximately $2.2 billion in the available for sale investment securities to the held-to-maturity category during the first quarter. We also reduced our investments in Ginnie Mae securities and increased our investments in US Treasury notes. The average duration of the AFS portfolio is now 2.4 years.

Loan balances were essentially flat compared to the fourth quarter but down $283 million compared to the end of the first quarter of 2010. We saw decreases in home equity and automobile loans offset by increases in commercial and residential mortgage loans. Deposits continued to grow to $9.9 billion at the end of the first quarter, up $23 million compared to the end of the fourth quarter, and up $418 million from the end of the first quarter of 2010. The increases were primarily in commercial non-interest bearing demand deposits and core consumer deposits. We decreased our wholesale funding with government entities by $156 million in the first quarter. Our average cost of public repurchase agreements is 9 basis points. Our shareholders equity was flat at $1 billion. And tangible common equity to risk weighted assets is 19.04%. We paid out $21.6 million in dividends in the first quarter. We continued our share repurchase program in the first quarter and repurchased 443,000 shares of common stock for $20.8 million. Our remaining buyback authority is $43.1 million as of March 31. Our Board declared a $0.45 per share dividend last Friday.

Now I'll turn the call over to Mary Sellers.

Thank you, Kent. Net charge-offs for the first quarter totaled $4.7 million, down $587,000 on a linked quarter basis and $13.3 million year-over-year. The year-over-year decrease was largely due to reductions in charge-offs of $3.6 million in commercial and $9.8 million in consumer, with residential mortgage and home equity accounting for $7.6 million. Non-performing assets totaled $34.6 million, down $3.2 million from the fourth quarter and $7 million year-over-year. During the quarter, $5.5 million in modified residential mortgage non-accrual loans wee returned to accrual status based on their performance. At quarter end, loans past due more than 90 days and still accruing interest totaled $5.6 million, down $2 million on a linked quarter basis, and $10.5 million year-over-year, again primarily driven off reductions in residential mortgage.

Restructured loans not included in non-accrual loans or loans past due 90 days or more, totaled $29.5 million at quarter end. A $5.8 million increase from the prior quarter given the previously discussed residential mortgage loans that were returned to accrual status. Residential mortgage loans modified to assist our customers in retaining their homes accounted for $18.6 million of the total. Our modification program has been successful with only one customer out of 48 not meeting the terms of their modification. Consistent with the improving Hawaii economy, we also continued to see stabilization and improvement on a linked quarter and year-over-year basis in what we consider to be the higher risk segments of our portfolio. Our land loan portfolio totaled $21.6 million at the end of the first quarter, down $2.1 million on a linked quarter basis and $11.9 million year-over-year.

As we've shared previously, in our residential mortgage and home equity portfolios, we consider loans originated after 2004 with current credit monitoring scores less than 600 and loan-to-value ratios greater than 70% to be of higher risk. At the end of the quarter, high risk exposure in our residential mortgage portfolio totaled $25.6 million, flat on a linked quarter basis and up $3.3 million year-over-year. In our home equity portfolio, higher risk exposure totaled $23.8 million which represented a $600,000 increase on a linked quarter basis and an $800,000 decrease year-over-year.

At the end of the quarter, residential mortgage and home equity loans and lines delinquent 30 to 89 days totaled $24.6 million, up $600,000 on a linked quarter basis and down $4.8 million year-over-year. Commercial construction loans totaled $80.4 million at the end of the quarter with $32.9 million in residential homebuilding exposure. Higher risk exposure totaled $14.7 million, down $200,000 from the fourth quarter and $14.7 million year-over-year. While it's still too early to assess, we anticipate that the recent events in Japan and higher oil prices will have some impact, either directly or indirectly, on tourism and Hawaii employment which in turn may affect some of our customers. Accordingly, we replenished the allowance for loan and lease losses for net charge-offs this quarter. Maintaining the reserve at $147.4 million. However, absent significant deterioration in the economy, and assuming continued improvements in credit quality, we may require a lower level allowance in future periods.

I'll now turn the call back to Peter.

Great. Thank you, Mary. As I mentioned at the top of our call, economic measures in Hawaii continued to improve during the first quarter due to a stronger visitor industry. Hotel occupancy rates, revenue, visitor arrivals and visitor spending all continued to show signs of improvement. We're beginning to see stabilization in job growth, and the unemployment rate in Hawaii remained unchanged at 6.3%. While we are heartened by the stabilizing trend in our local economy, as both Kent and Mary mentioned, we remain somewhat cautious as we wait to see how the earthquake and tsunami in the northeast Japan district impacts tourism here in the state of Hawaii. Arrivals from Japan represent 17% of the total number of visitors to Hawaii in 2010. This time it's too early to predict the effects of this disaster on our marketplace. However, it's likely that the number of Japanese visitors to Hawaii will decline in the near term.

Now at this point we would be happy to respond to your questions.

(Operator Instructions) Our first question comes from the line of Craig Siegenthaler of Credit Suisse. Please proceed.

Hi, good afternoon. This is actually Vepa Botchpi filling in for Craig today. Just to start off, how has the loan origination pipeline trended in the first quarter versus the fourth quarter?

On the commercial side, both our C&I, as well as commercial mortgage books, look surprisingly robust, from what we've experienced over the past couple of years, so we feel good in that area. Residential mortgage, as you know, is a bit softer in the first quarter as compared to, call it the second half of last year, as much of the refi boom is over at this point. And our consumer book is beginning to build, although that's a business that we really need to concentrate on.

Great. And have you seen any increase in utilization rates on the commercial side or has that stayed flat?

Yes, it's been pretty flat.

And then has the pricing gotten materially more competitive?

You mean has pricing gone down?

Yes.

We've seen pricing stabilize. I would say it's been relatively flat, actually. Having said that, through the credit crisis and into the recovery, pricing has been, I think, as competitive as it's ever been. But we've not noticed anything over the past quarter or so from a pricing standpoint changing.

Got it. Great. Those are all my questions. Thank you.

Our next question comes from the line of David King of RBC Capital Markets. Please proceed.

Thanks, good morning, everyone. First off, I was a little surprised to see the drop off in overdraft fees this quarter. Can you talk about what drove that? Was it some reordering of the processing? And then how should we think about the run rate for deposit service charges going forward?

Yes, we did make some changes in the overdraft space. And that, on top of Reg E, has impacted the overdraft revenue. I think we made a comment in our last call that we expected overdraft revenue to be about $14 million lower year-over-year. And, what we've seen here in the first quarter pretty much supports that. The year-over-year change was $3.5 million, so that pretty much matches up with the $14 million annualized figure.

So, then this is a good run rate, is your sense, going forward?

Feels like it.

I think so.

Okay, that's helpful. And then as a follow-up to the last question on the commercial loan demand, it sounds like that's still robust. Peter, maybe, have you seen any noticeable drop-off at all or anything since the events of March 11th, as best you can tell?

On the commercial front?

Yes. Any commercial.

David, nothing as of yet, although I would say it's still a bit early to really get an indicator there. Okay, fair enough. Thanks guys.

Our next question comes from the line of Brett Rabatin of Sterne, Agee. Please proceed.

Hello, everyone. Wanted to ask first of all, maybe Mary can go over the potential reserve release, and just some broader color around reserve levels. And obviously, some conservative commentary on the potential for higher oil prices in Japan to have an impact. But it seems like if those things don't come to material fruition then perhaps the reserve may come down quite a bit the next year. Can you talk a little bit about that, Mary?

Sure. Well we did take a look at what industries within our commercial portfolio would be impact, either directly or indirectly, to the best of our knowledge, by the Japan situation and the increasing oil prices. And that equated to about $265 million. Nothing there we saw, we really applied this historical performance from these various events that would be too critical to us. But, again, too early to tell in a very different event, so we're watching that. As I said, if we continue to see improvements in credit quality and don't have the deterioration that we might potentially have from this, we would expect that we would be in a position to release reserves. We look at that every quarter and make that decision at that point.

Okay, great. And then I wanted to ask a question regarding the tourism trends. I'm just looking at the daily trends since the beginning of April and so far, the tourist totals are running about $20,500, which is holding up pretty nicely. And so, I'm curious to hear what stats or numbers you have seen that may lead you to believe that those numbers will be coming off, given the stability so far.

Yes, Brett. Since March 11th, the figures, the Japanese visitor numbers have fallen about 25% compared to a year ago. The Hawaii Tourism Authority has made some estimates and they are assuming that April will be down about 45%. They are also forecasting that May will be down 35%, and then June would be down 30%. So, that's what they're saying. Those are Japanese numbers.

Right. So, are the other trends from other countries as well as the West Coast primarily obviously offsetting that?

Yes, West Coast continues to look good. And, really, the growth machine over the past year has been international other, which would be South Korea, Canada, and Australia markets that are having good economic conditions, one. And two, and very favorable foreign exchange position versus the dollar. So, we got good growth there last year and we are anticipating to have good growth again this year from that market. And that's really where the opportunity, I think, to offset a lot of what's happening in Japan is coming from.

Okay. And then just lastly, I wanted to ask about the securities portfolio yield this quarter compared to last quarter. Was there any abatement of framing amortization or can you talk about the yield a little more this quarter? And what you sold in securities?

Okay. I'll take the last part first and then try to answer the yield second. So, we did reduce the proportion of our GNMAs. So, as of the end of the year, GNMAs represented 89% of the portfolio. We're almost, as we speak, now at 71%. So, we've made a shift here on reducing the mortgages, and in its place we're purchasing Treasuries. We haven't yet done so, but we're also going to add some corporates into the portfolio. So, the yield for the quarter was a little bit higher compared to the fourth quarter. And so that's going to be a combination of buying into the market, which was a higher yield in this period compared to the fourth quarter, and also a reduction of the premium amortization. So, it's really a combination of all those things.

I do want to comment also, that we saw a little bit lower yield in the month of March as compared to the average for the quarter. So, we did average 3.24% for the quarter. March was a little bit lower. It was closer to the fourth quarter result of 3.15%.

Our next question comes from the line of Joe Gladue of B. Riley. Please proceed.

Hi. Good morning. Just start off with a follow-up on the securities question. In addition to the shift from, shifting some securities from available for sale to held-to-maturity, there's also a decline of about $190 million in the securities portfolio. Is that something, a trend you expect to continue going forward?

The approach to the portfolio is really the differential between our funding and our loan position. To the extent loans are changing, and perhaps even increasing, then there is some prospect that the securities portfolio might follow and actually come down a little bit. I wouldn't anticipate anything very dramatic, though, in the next couple quarters.

Okay, and just move on. There was some decline in FTE employees during the quarter. Is that anything seasonal or anything, just some general reductions there?

There's nothing programmatic in that reduction. It's just the normal ebb and flow of people movement. I think we've got upwards of 200 open positions in the Company right now that are in various phases of being filled. So, nothing special there.

Okay. And move on to a couple questions for Mary. I know in the fourth quarter there was a couple of large recoveries but it seems that, just in general, and fairly consistently, you've had a pretty high level of recoveries relative to gross charge-offs. Does that just reflect your aggressiveness in charging down loans or is there anything unusual that's caused the high level of recoveries in recent quarters?

No. In the fourth quarter it was really just timing in terms of on a couple of construction loans. I think the relative level of charge-offs, though, across our commercial portfolios doesn't lead to a steady stream of ongoing recoveries of that nature.

Okay. And I don't know if I missed it but did you mention what was going on with 30 to 89 day delinquencies in the quarter?

30 to 89 days in the residential portfolio were up modestly, about $600,000 in the quarter, but down overall year-over-year $4.8 million. And those are the two biggest pieces. Otherwise, across the other portfolios we saw declines.

Okay. And again, just following up on the TDRs that shifted to performing, is that likely to be a trend that continues? Are there other big chunks of that in the next couple quarters expected as long as they continue to pay according to terms?

We have about $4.8 million in modified residential loans that are in TDRs at the end of the quarter. So, some of that hopefully will move to accrual status, but it doesn't look to be a huge amount.

Okay that's all my questions, thank you.

Great. Thank you.

Our next question comes from the line of Aaron Deer of Sandler O'Neill & Partners. Please proceed.

Good morning, everyone. Just a quick question on the share repurchases. It looks like you stepped up the pace of the buyback a bit in the quarter. I'm just wondering, going forward, assuming there's not much in the way of opportunity just to grow the balance sheet, do you expect to maintain the same pace? And is there a target capital level that you're looking to maintain? And if so, which one of the capital metrics are you looking at on that?

Yes, Aaron, we did step up the pace in the first quarter. Basically, we doubled the level of share repurchases as compared to the fourth quarter of last year. That's consistent with what we had said at the end of last year, where we said we were going to use 100% of earnings and return that to shareholders either in dividends or repurchases. So, that's where we are right now. Whether or not we have excess capital, and whether or not we go beyond the current level, that really still yet remains to be seen. And we have not made that determination nor can we really make any announcement on that point. So, for the time being, we're at 100%.

Okay. And then refresh me, your interchange fees, that was what? -- around $23 million in 2010? Is that right? In revenues?

Yes, I think that's right, Aaron.

And have you gotten any sort of feedback from lobbyists or anything in DC in terms of where the Durbin Amendment stands and what your expectations might be for that going forward?

We know that there is lively debate going on, on both ends of that argument. But I don't think we're in any better position than anyone else to understand how that's ultimately going to be resolved.

Okay. And then lastly, you mentioned the open positions. I'm wondering, if I'm not mistaken, I think you do your merit pay increases usually around the beginning of April. Any expectation that's going to have on your comp levels?

No, it should be pretty stable.

Okay that's great. Thank you for the help.

Our next question comes from the line of Jeff Rulis of DA Davidson. Please proceed.

Good morning. Circling back to the commercial real estate demand, or the success you've had growing that portfolio the last couple quarters, do you equate that success in stealing market share or demand overall in the market has picked up?

It's really more the former than the latter. We're seeing some improvement in transactions in the marketplace as compared to a year or two ago, although that was a pretty muted environment to begin with. But, really, I think the bulk of our growth has come from the fact that a number of essentially out-of-town lenders are not in the marketplace anymore, with the conduit market being a bit more muted and a number of the model lines just not really having a presence anymore.

Okay, thanks. And then, on the construction segment, it actually had a very modest growth in the quarter. Could we assume that we're now at a level in that construction piece that is fully fleshed out and maybe not massive growth but run-off has largely been complete there?

Yes, I think that number probably reflects a steady state.

Okay great, thank you.

Yes.

Our next line of questioning comes from Brian Zabora of Stifel Nicolaus. Please proceed.

Thanks, good morning. A question on the securities book, and just the duration. I think you said it was 2.4 years for the available for sale. Do you have it for the entire portfolio?

I don't have that on me but it's going to be slightly higher. We can provide that figure.

So, not much change from the prior quarter?

That's right. The duration extended out a little bit just because rates were higher. Our actions brought it back down closer to what it had been at the end of the fourth quarter.

Great. And then just a question on the C&I loans. I know it's early stages where you're seeing some growth and there might be some lumpiness, but any thoughts on why it's down a little bit this quarter versus the strong growth last quarter, is there any seasonality or any pay downs you had in the first quarter?

A few pay downs. As the markets open up a bit, Brian, we're seeing at the higher end of our client base some movement towards securitization versus bank borrowing. So, that's impacting us a bit but in general pretty flat.

Thanks for taking my questions.

Sure.

Our next line of questioning comes from Erika Penala of Banc of America Merrill Lynch.

Hi, good morning, this is Russell Gunther on behalf of Erika. Most of my questions have been asked and answered, so I just have one. I'd like to focus in on the resi portfolio, if you could. You mentioned high risk portfolios have been flat. Lost content has been improving over the last couple of quarters. Small uptick in early stage delinquencies. Could you just update us on your outlook for the asset quality performance in this portfolio in 2011?

I think if you look at the high risk segment, as you said it's really pretty flat. Modest uptick year-over-year but a couple of loans can move that number, the $3 million. Early stage delinquency I quoted was across both residential and home equity. And resi has actually been moving down. If you look just at year-over-year, delinquencies were down $4.8 million. I think the run rate would be very comfortable to say would be lower than we saw last year.

Okay, that helps. Thank you, that was it for me.

Thanks.

Our next line of questioning comes from Kevin Reynolds of Wunderlich Securities. Please proceed.

Wow, they got that name right. Good morning, everyone. Most of my questions have been asked and answered, as well. But I did wonder if you could maybe share some thoughts on how you expect the regulatory environment, as it changes, to impact the competitive environment in Hawaii for those competitors that remain out there. Do you think, is that going to be a net positive for you or do you think it will have no necessarily impact on how you do business out there?

Yes, what's interesting, or what is about to happen with the Consumer Financial Protection Bureau, we feel pretty good about that transition as we've effectively been regulated by the Federal Reserve now for a number of years. So, certainly there will be some transition with that new change over but we're feeling at least a bit familiar with the institution. What will happen within the landscape is we have some institutions out here that are OTS regulated. That obviously is going to change. And then for organizations in excess of $10 billion, all of those organizations will now fall under the Consumer Financial Protection Bureau. So, a bit of a repositioning, if you will, from a regulatory standpoint. And obviously, we can't speak for the other institutions but we feel pretty good about how that's lining up.

Okay, thanks a lot.

Our next questions comes from the line of Yoana Koleva of Morgan Stanley. Please proceed.

Good morning. Can you talk about what yields you're currently getting on your new security purchases?

We've been in the two year to three year category of Treasury. That's what we've been buying most recently. And so, the yields reflect pretty low numbers. So, that's going to be 1.5% to 1.75%, something like that.

Okay, thank you. And in light of the recent back up in rates, what is your outlook for margin going forward? Do you think we've passed the bottom in the fourth quarter or do you see further downside risk margin from here?

It's impossible to know. I just don't make predictions on interest rates. I think we've positioned ourselves for the risk of higher rates. Whether that's the result, I don't know. I made a comment earlier that we saw a little bit lower margin towards the end of the quarter than the average. So, other than that, I don't have any other forecast for you.

Thank you.

You're welcome.

Our next question comes from the line of Jackie Shamira of KBW. Please proceed.

Hi, good morning everyone. Like everyone else, most of my questions have been answered. But I did want to check in and see what the variable rate component was in the securities portfolio? If there was one?

Jackie, I don't have that figure. We can try to get that for you.

Okay, great. And just one last question on consumer sentiment. I know there's not a real state measure for Hawaii but I wanted to see what just the general population thoughts were, if you heard anything through your customers following international events and given higher oil prices and everything.

Yes, we don't really have consumer sentiment levels regionalized out here, Jackie. I'll tell you that we just conducted, every quarter we do about 500-plus phone interviews to detect or determine customer satisfaction levels here with Bank of Hawaii. And those numbers, and somewhat surprisingly, frankly, were at an all-time high. So, I think given where the marketplace is, where the economy is, and, frankly, given where the industry is positioning-wise, we felt pretty good about that.

Okay, great. Thank you very much. Great quarter.

Thank you.

(Operator Instructions) Our next question comes from the line of Casey Haire of Jefferies. Please proceed.

Good morning. Just a question, could you talk a little bit about, provide a little color on the deposit growth, which slowed down a little bit this quarter? Was that seasonal or was there any change in the competitive landscape? Just a little color there.

Yes, I'd say we've seen a bit of a slowdown in commercial deposit acquisitions. We've brought down our savings rate somewhat markedly, I'd say, over the past year, so that's had a bit of an impact. I tend to look at the business, the deposit side from an average deposit basis and really focus more on the core side. And when we do that, we see that consumer core deposits were up 2.3% on a linked basis. So, pretty strong growth there. And commercial core deposits -- so checking and savings -- were up 2.7% on a linked basis. Again, those are average balances. So, reasonably good dollar numbers. And then when we look at the transactional count, I think our consumer checking accounts were up 3% linked and our commercial checking accounts are up about 1% on a linked basis. So, continued to be reasonable and measured growth both on the consumer and the commercial front.

Okay. And then switching to expenses, the efficiency ratio was a little higher than what you guys normally run. Can you guys talk about where you would expect the efficiency ratio to level set once assuming worst case Durbin, and loss of interchange?

I'm not going to quote you a ratio, but we're cautiously optimistic that we're going to continue to make progress on the expense front. We've put some effort behind this. We will see a little bit lower FDIC expense, really starting this month, in fact. So, I'm hopeful that we're going to see a little bit lower level of expenses going forward.

Okay, that's all I had. Thank you.

You're welcome.

With no further questions in queue, I would now like to turn the call back into the hands of Cindy Wyrick for closing remarks.

Thank you, Larry. I'd like to thank everyone for joining us today and for your continued interest in the Bank of Hawaii. As always, if you have any additional questions or need further clarification on any of the topics discussed today, please feel free to contact me. Have a great day, everyone.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may disconnect at this time.