Bank of Hawaii Corp (BOH) 2011 Q3 法說會逐字稿

Good day, ladies and gentlemen. And welcome to the third quarter 2011 Bank of Hawaii earnings conference call. My name is Jeremy and I'll be your operator for today. At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) I would now like to turn the conference over to your host for today, Ms Cindy Wyrick, Director of Investor Relations. Please proceed.

Thank you Jeremy. Good morning everyone and thank you for joining us today as we review the financial results for the third 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 included in our 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 Ho.

Thanks, Cindy. Good morning and Aloha everyone. We appreciate you joining us today. Bank of Hawaii achieved solid results for the third quarter. Our balance sheet remains strong with high levels of capital and liquidity and adequate reserves. Revenues continued to be challenged by lower interest rates at the net interest income line, and by changes due to regulatory rulings at the non-interest income line. Our expenses though remain well controlled and our asset quality remains a strength for the organization. Return on assets for the quarter was just a touch ahead of 1.3% and return on equity was 16.8%. Now I'd like to turn the mic over to Kent at this point to give you some insight into our financial performance and then I'll ask Mary to provide color on our credit quality. Kent?

Thank you, Peter. Good morning. Net income for the third quarter was $43.3 million, or $0.92 per share, compared to $35.1 million or $0.74 per share in the second quarter. And $44.1 million or $0.91 per share in the third quarter of 2010. Included in the second quarter was a $9 million legal settlement related to overdraft claims. There were no gains from the sale of securities in our investment portfolio in the third or second quarter of 2011, compared to $7.9 million in the third quarter of 2010. Our return on assets in the third quarter was 1.31%. And return on equity was 16.8%. Year-to-date net income was $120.8 million or $2.54 per share, compared to $143.4 million or $2.96 per share in 2010.

We have realized $6.1 million in securities gains this year, compared to $42.8 million last year. Year-to-date our return on assets is 1.24% and return on equity is 15.8%. Our net interest margin in the third quarter was 3.09% compared to 3.16% in the second quarter. And 3.27% in the third quarter of 2010. Year-to-date the net interest margin is 3.16% compared to 3.50% last year. The lower margin is due in large part to the lower interest rate environment. The credit provision in the third quarter was $2.2 million, compared to $3.6 million in the second quarter and $13.4 million in the third quarter of 2010. The credit provision for the third quarter included net charge-offs of $3.7 million, and a $1.6 million decrease to the allowance. The credit provision for the second quarter included net charge-offs of $6 million and a $2.4 million decrease to the allowance and the credit provision equaled net charge-offs for the third quarter of 2010.

Our allowance for loan and lease losses at the end of the third quarter was $143.4 million, or 2.7% of outstanding loan and leases. Non-performing assets were $37.8 million at the end of the third quarter, up $3.6 million from the second quarter and down $7.4 million from the end of the third quarter of 2010. Included in non-performing loans are $23.8 million in residential mortgage loans as of September 30. Non-interest income for the third quarter was $50.9 million compared to $49.5 million in the second quarter, and $63.1 million in the third quarter of 2010. Mortgage banking produced $5.5 million of income in Q3, versus $2.7 million in Q2. This is due mainly to higher refinance activity. The decrease compared to last year is primarily due to realized gains in the securities portfolio, up $7.9 million in the third quarter of 2010.

Looking ahead we will see lower debit interchange revenue due to the Durbin Amendment and we estimate that this will be approximately $4 million reduction in Q4 compared to Q3. Year-to-date non-interest income was $154.2 million, compared to $203.8 million in 2010. The decrease was primarily due to $36.8 million decrease in securities gains and also lower overdraft fees. Non-interest expense totaled $84 million in the third quarter, compared to $93.8 million in the second quarter, and $89.9 million in the third quarter of 2010. As previously mentioned, the Q2 result included a $9 million legal settlement expense. We have also provided for a $2 million donation to the Bank of Hawaii Foundation in Q3. Year-to-date non-interest expense was $263.8 million compared to $257.5 million in 2010. The effective income tax rate was 29.6% in the third quarter, compared to 29.1% in the second quarter and 24.7% in the third quarter of 2010. The higher rate compared to last year was primarily due to the sale of our equity interest in two leveraged leases which resulted in a $4.4 million credit to the provision for income taxes in the third quarter of 2010.

Our investment portfolio now stands at $7 billion, and we have unrealized pretax gains in the portfolio of $187 million. Of that amount, $97 million was in the AFS portfolio, and $90 million is in the HDM portfolio. We continue to invest on a conservative basis, primarily in Treasury and Ginnie Mae mortgaged securities. We have also added some SBA floating rate securities and corporate bonds this quarter. The average duration of the AFS portfolio is 2.03 years. We've decreased our funds sold by $207 million in the third quarter. Loans were $5.3 billion at the end of the third quarter. Deposits were $10 billion at the end of the third quarter, up $30 million compared to the end of the second quarter and up $407 million from the end of the third quarter of 2010. We increased our wholesale funding with government entities by $56 million in third quarter, and our average cost of public repurchase agreements is 8 basis points.

Our shareholders equity increased by $14 million to $1.017 billion. We paid out $21.1 million in dividends in the third quarter. And we continued our share repurchase program in the third quarter, re-purchasing 723,000 shares of common stock for $30 million. Last Friday our Board declared a dividend of $0.45 per share for the third quarter. Our capital position remains strong and at the end of the third quarter our 2 CDs or risk weighted assets was 18.9%. Now I'll turn the call over to Mary Sellers.

Thank you, Kent. Net charge-offs in the third quarter totaled $3.7 million, down $2.2 million on a linked quarter basis and down $9.6 million year-over-year. The linked period decrease was primarily due to a $3.4 million partial recovery realized on a previously lead charged off leverage lease. The year-over-year decrease reflects reductions of $8 million, and $1.6 million in the consumer -- I'm sorry, commercial and consumer portfolios respectively. Non-performing assets totaled $37.8 million, up $3.6 million from the second quarter and down $7.4 million year-over-year. The linked period increase was due to the addition of the $5 million balance of a commercial loan net of a $3.5 million partial charge-off taken this quarter. Residential mortgage non-accrual loans totaled $23.8 million at quarter end. The level of these non-performing loans will continue to be impacted in the near term due to the longer resolution time frame for residential assets.

At quarter end, loan past due 90 days or more and still accruing interest totaled $10.9 million, up $3.1 million on a linked quarter basis and up $311,000 year-over-year. The linked period increase was due to a $1.8 million increase in residential mortgage, and a $1.5 million increase in home equity. Restructured loans not included in non-accrual loans or loans past due 90 days or more totaled $33.1 million at quarter end, up $4.9 million from the prior quarter, primarily due to the modification of a $3.5 million commercial loan. Residential mortgage loans modified to assist our customers in retaining their homes accounted for $21.7 million of the total. Consistent with the stable Hawaii economy, we continue to see 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 $18.3 million at the end of the second quarter, down $1.7 million on a linked quarter basis and $9.9 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, higher risk exposure in our residential mortgage portfolio totaled $20.3 million, down $3.5 million on a linked quarter basis and $1.1 million year-over-year. In our home equity portfolio, higher risk exposure totaled $22.3 million, up $500,000 on a linked quarter basis and down $1.6 million year-over-year. At the end of the quarter, residential mortgage loans delinquent 30 days to 89 days totaled $21.3 million, up $4 million on a linked quarter basis and $5.1 million year-over-year. The linked period increase was driven off three large loans. Two of which have been resolved and only one of which, a neighbor island second home loan is expected to result in any loss.

Home equity lines and loans delinquent 30 day to 89 days totaled $8 million, up $1.6 million on a linked quarter basis and $322,000 year-over-year. The linked period increase was driven by neighbor island accounts where they continue to experience declines in property values and higher unemployment rates. Commercial construction loans totaled $69.6 million at the end of the quarter, with $31.1 million in residential home building exposure. Higher risk exposure totaled $15.4 million, down $800,000 from the second quarter and down $3 million year-over-year. The provision for loan and lease losses was $2.2 million, which given net charge-offs of $3.7 million reduced the allowance by $1.6 million to $143.4 million. Absent significant deterioration in the economy, and assuming continued improvement or stability in credit quality, we anticipate that we may require a lower level of allowance going forward. I'll now turn the call back to Peter.

Great. Thanks, Mary. The Hawaiian economy remains stable. Visitor statistics remain positive. Year-to-date through August visitor arrivals by air are up 2%. This, despite an 8% reduction in Japan arrivals resulting from the March Sendai earthquake and tsunami. More importantly, visitor spending is up 14% year-to-date. The majority of this growth has come from international markets other than Japan including Canada, Australia, New Zealand and China. This dispersion of revenues provides an attractive diversity of market sources for our visitor industry. Unemployment edged up a bit in September to 6.4%, versus 6.2% in August but still well below national averages. Single family home values on Oahu, our primary market remain stable on a year-over-year, year-to-date basis. Now we would be glad to answer whatever questions you may wish to ask.

(Operator Instructions) Craig Siegenthaler, Credit Suisse.

So first, I just wanted to hit on the declining compensation and I -- there's a table in the press release, I'm actually referencing. But if you look at share based comp, it had a very large sequential decline. I was wondering if you could help us think about what was going on there?

Yes. We do have a share appreciation program and so, the accrual is a function in part due to the market price of the stock. And so, we had that in the second quarter. We really didn't have that in the third quarter. And so, the accrual was smaller in the third quarter.

As you look over into the fourth quarter, should that actually recover more towards the June level or are we close to the run rate here?

It's hard to say. I don't know. It's probably halfway one and half the other, to be honest.

Got it. If I switch over and just think about the balance sheet for a second, it looked like there's about $200 million-ish of deposits at the Fed which has moved into securities portfolios. I was looking for 2 questions. Is there any more repositioning you can do to help make the NIM a little bit more defensive here? And also, with the 10-year back above 2%, I'm wondering if we should expect any downward price pressure in your available for sale portfolio yield, it was about 2.18% last quarter. Is that, in your view as low as it goes as long as the 10-year's over 2% here? So, 2 questions there.

Yes, I heard the questions. So, on the funds sold. Yes, we did bring down the balance quite a bit here in the third quarter. I think it's possible for us to operate at even a lower balance of the funds sold. So, there is some possibility of reducing that particular line item in favor of a little bit more investment side. On the valuation of the AFS portfolio, it's obviously going to be a function of interest rates. As I mentioned in my prepared comments, we have $187 million of unrealized gains in the portfolio and that's wholly a function of the market and as I think you pointed out, Treasuries and the 10-year in particular, diminished about 124 basis points during the third quarter. It's bounced back a little bit since then. So, we're above 2% at this time, and so the AFS mark is going to fluctuate as a function of interest rates. Did I answer your question, Craig?

Sort of. I mean, I still -- I would still like to know where the run rate yield of the available for sale is today, given with rates higher. We saw the 10-year get down in the 1.6%, 1.7%. Now, we're well above 2.1%. Should we expect more downward pressure on the available for sale yield or do you think we're there now?

Let me just tell you what happened in the third quarter, in terms of runoff and reinvestment. So, that's probably a good way to picture it. So, in the quarter, between runoff and maturity, we had $328 million change over in the period and the runoff rate was 2.8%. We reinvested and the reinvestment rate was right around 2%. So, you can see that there's a differential still yet.

Jeff Rulis with DA Davidson.

Maybe a question for Peter. Just in a challenging revenue growth environment, looking at controlling costs, is there a goal on the efficiency ratio that maybe versus historical levels that you would be shooting to push that to or is a mid-50% -- that's tough to improve upon?

Well, it's a good question. We tend not to focus too terribly on the efficiency ratio. Frankly, I think there are challenges both to the denominator and numerator when you're dealing with that ratio versus the nature of our business. Obviously, the environment is challenged from a revenue standpoint. I would tell you that our approach to that situation is that this is more of a secular situation versus a cyclical situation. So, we are taking a pretty hard look at our expense line and trying to understand deeply where we can bring down expenses without impairing either the operation or the overall franchise quality of the firm. So, I wouldn't say that we've got -- in fact, we don't have a hard number that we want to get to but I will tell you that out of the 28 businesses that we run and the numerous operations that we run, we're looking very closely at where we can create efficiency with as little down side to the operation as possible.

Okay. Fair enough. And maybe a question for Mary. On the commercial real estate loan production, would you characterize that as market share stealing or new demand or maybe a mix?

A bit of a mix. In that equation. It was largely due to 4 loans and with a nice weighted average LTV around 59%.

Okay, great. And then just one quick last one on -- safe to assume that investment securities gains would be modest, if any going forward, given the last couple quarters haven't had any?

Yes, I'd say that's a pretty safe assumption.

Okay.

But you never know. I mean, there may be repositioning that needs to happen. So, I wouldn't rule it out entirely but as we think about the portfolio, we don't have any particular desire to realize any gains at this time.

Joe Morford, RBC Capital Markets.

I guess just following up on Jeff's question, actually looking at the C&I portfolio this quarter, the balances were down a little bit. Is that just quarterly volatility or did you actually see customers being a little more cautious in the quarter? Any further decline in line utilization rates or anything like that?

Yes, Joe. That's a good pick-up. Actually, if you look at the linked average versus the linked period end, there's a pretty big variance there. So, linked period end was down 3% in C&I. Linked average was actually up 6%. So, we saw a good amount of line pay downs right at the end of the quarter. I'm not sure I'd read anything into that regarding business perception or whatever. But it was what we experienced and actually I think the period end balances for the quarter mask what's been a pretty good performance in our overall C&I portfolio for a while now.

Okay. And then a separate question would just be, give us a little more color on mortgage banking volumes, refinance activity and just overall expectations for the mortgage banking revenues going into the fourth quarter here.

Well, we seem to be in yet another refi boomlet as we call it. We had a lot of business last year towards the end of the year as a result of where rates are. Frankly thought that we might have a bit of a reprieve from that activity but seemed to find ourselves in a bit of the same situation, maybe not quite as intense as what we experienced last year. So, our thought is that it's going to be another pretty reasonable year for mortgage banking activity, so that helps on the fee side. It also, however, places some pressure on the balance sheet. So, as we see activity pick up on the mortgage side, what happens is we get more churn in our resi mortgage portfolio and we get frankly more churn in our home equity portfolio as we have a good number of clients that have a second mortgage as effectively their own debt on the asset. And so, as rates come down in the first mortgage space, we see a fair amount of runoff in that product segment as well.

Brett Rabatin, Sterne Agee.

Wanted to ask maybe a question for Mary, just around credit. I think you mentioned, Mary, that there might be some credit levers going forward and was just curious if that pace might accelerate from what we've seen so far this year, maybe in the next few quarters, in terms of the reserve.

I think we've been pretty consistent in how we built the reserve and we'll continue to evaluate it as we go forward quarter-to-quarter and probably take a similar posture, given where asset quality sits.

Okay. And then secondly, just wanted to ask, given the exposure to Durbin and then just generally a large securities portfolio in a low rate environment, was curious -- I know it's early in the budgeting, but was curious if you were thinking about the offsets to those impacts, if you were [charging/not charging] any fees, if you had any thoughts on how you're going to offset some of that pressure as we go into 2012.

I'll take a stab at that, Brett, and maybe Kent can chime in as he sees fit. Well, Durbin kicks in this quarter. Debit is a pretty good sized operation and line item for us. What we have attached to some of our debit cards is a mileage program. So, clearly the heft of that program has been amended to reflect more closely to the value of the program to the Company. As far as additional fees off into the future, that's frankly a question mark for us. And I think you've probably heard us say in prior calls and in prior meetings that, we're not sure that, that's really the path to take. We're going to be focused on where can we gain efficiencies from an expense standpoint in the Company. We're going to be focused on where can we generate revenue increases through an exchange of value between the Company and our customers before we get to a pure value transfer which would be basically providing the same product for a higher price. We're just not quite comfortable yet that, that's the way to go. So, a bit of a question mark is how I'd characterize it.

Okay. Well, maybe just coming at it from a different angle, and just in terms of looking at revenues total this year, they've basically been declining a little bit with mostly the margin pressure. I guess, I'm looking for some color around is the goal to keep revenues flat next year? Can you talk about what you view -- I know you don't give guidance around EPS but can you give us a view of your thoughts on the environment for you in 2012?

Yes, well, it's going to be -- we're going to be comping I guess off of Durbin next year. So, obviously that's going to be a headwind for us. I guess what I would characterize our approach to that is, certainly we recognize that creates revenue pressure for us. We don't really approach the business though from the standpoint of having to substitute one level of revenue with another. So, we're focused on building profitability in the business again through building up or creating expense opportunity where possible and figuring out new revenue sources where possible and frankly as a last resort trying to figure out where we can price up for effectively no differential in value proposition.

Brian Zabora, Stifel Nicolaus.

A question on, you mentioned about C&I being masked a bit this quarter but any sense on the pipeline, how it stands today versus last quarter?

Yes, Brian, you know that we don't quote the pipeline but I'll tell you, things look pretty good. And a lot of questioning both internally and from our external stakeholders on where is sentiment heading in the business community given all that's swirling around. I think in general, the environment remains pretty stable. We're seeing probably an increased level of investment and activity from prior years. Then on top of that, there's a fair amount of market share opportunity as some of the larger mono lines that have been trolling in our neighborhood for years now, just seem to be a bit more on the sidelines.

Great, that's helpful. Just a question on trust fees, Hawaii did change I think the laws recently. Just wondering what you thought about potential opportunities in the business.

Well, trust fees are, as you know that is a portfolio based pricing scheme. So, as the markets come down, we've had some pressure there. I would say that, there's some seasonality to that business. So, we tend to generate more revenue on the front half of the year versus the back half because we've got a pretty substantial tax business. As far as things happening as a result of changes in the laws out here, we're not seeing a whole lot of that.

Ken Zerbe, Morgan Stanley.

Obviously, you said you guys are buying back shares this quarter. Can you just talk about your appetite for buying a little bit more? Obviously, your capital position is exceptionally strong. Loan growth, kind of is what it is. We understand the environment. But would you be willing to go materially over the 100% payout ratio for any noticeable length of time?

Well, I mean, I think we've demonstrated now for 2 quarters that we've exceeded earnings but having said that, we're going to be careful and measured in how we manage capital. We'll take account of the value proposition and the environment and all the other relevant factors in sizing it, and so -- and it's the type of thing where you really have to be in the midst of the environment and make a decision at that time. It's really difficult to project out an absolute number in this area.

Okay. No, that makes sense. And then just any comments on the corporate tax rate? Looks like it was a little bit lower this quarter.

Yes. I mean, we always have credits and low income housing matters that flow into periods. The rate was actually pretty comparable to the second quarter rate. In fact, it was higher than the effective rate in the third quarter of last year. So, that's -- it's mainly the low income housing credits that impact that.

Okay. And but going forward, should we expect a similar amount of credits next quarter or -- because it seems like it would be a little higher this quarter, correct, versus say, second quarter?

Probably won't see too much of a change into the fourth quarter. Next year's a different year. I just really -- I don't have a lot of clarity into it but for the full year we're pretty much at the rate we're going to be at for the year.

Casey Haire, Jefferies.

My question's on -- just a follow-up actually on the interchange stuff and the potential offsets there. Are you guys seeing anything from your competitors in terms of what they're doing to recapture these new reg reform hits? If so, are you purposely waiting to lag their changes?

Casey, we've not seen too much change in the marketplace here in the Hawaiian market. Guam is the other market we operate in, frankly a little less clarity into the conditions there, but I think it's probably similar.

Okay. And then on the -- some of the specials, the gain on the mutual funds as well as the charitable donations, I assume those are in the other line on each side. If you strip those out, both were a little low. Is that the right run rate to think about going forward?

I'm going to answer yes to the first part of your question. Hard to know on the run rate going forward. I just am not prepared to comment on the future on that.

But both items were in the other line?

Yes.

Okay. Great. And then lastly, just one question for Mary regarding the provision. If credit continues to improve and loan demand remains weak, would you guys -- if the formula dictated a credit provision, would that be something that you guys -- we might expect down the line?

Yes. Possible.

Jonathan Elmi, Macquarie.

I'm sure you guys saw this morning, the FHSA announced some enhancements to their HARP program. In particular they removed that 120% LTV cap for refi activity. So, I'm just trying think about, if you could help us frame the risk to the margin or the risk from any accelerated premium amortization there on the MBS portfolio.

The numbers are probably pretty small and not likely to have an impact. So, Mary's pointing out to me that modification levels are very low.

Aaron Deer, Sandler O'Neill & Partners.

Sorry, guys, all of our questions have been answered.

Jacque Chimera, KBW.

I had a question on the effect of the Durbin amendment that's going through this quarter. In previous guidance you said it would likely be $12 million to $14 million, and then the $4 million that you had mentioned in the prepared remarks that equates to roughly a $16 million run rate. Is that seasonal, the change or has something shifted in that $12 million to $14 million guidance.

No, the $4 million is the more up-to-date number. Now, that's on the revenue side. Peter commented on the rewards aspect which is being modified which might have a small offset to that. And so net, we might be back down to the $12 million to $14 million income effect. But the revenue effect is $16 million.

Joe Gladue, B Riley.

I think Mary mentioned I guess that 30 day to 89 day delinquencies were about $8 million in the mortgage portfolio. Just wondering what the early stage delinquencies were in total.

In total across the full consumer portfolio?

The full portfolio, everything.

Yes, hang on one sec. $37 million.

Okay. And that's -- okay. And that's not including anything that's in non-accrual, correct?

No.

Okay. And just curious, again, with some of those increases on the mortgage delinquencies and everything and also, I guess, with the increase in TDRs. Well, first off, were you doing anything different in looking at modifications that drove some of that increase in TDRs?

Well, we had one commercial loan that we modified for $3.5 million and we had 2 residential mortgages we modified for $1.2 million. So, that was the quarter change. In terms of early stage delinquency within the residential mortgage portfolio, we really had a couple of housekeeping things, private banking client, traveling, that type of thing. So, if we get down to it, it's probably about a $1.7 million increase.

(Operator Instructions) Russell Gunther, Bank of America Merrill Lynch.

Just a follow-up on the commercial modification in the quarter. If you could give us some color on what type of credit that related to and what the modification was?

It relates to a customer that had a business operation where they originally planned to ship waste to the mainland and there were some challenges with that strategy. They have repositioned their business and have secured a contract that should amortize that debt. They have substantially supported the credit through the process and we do not expect to incur any loss on this asset.

Okay. Great. Thanks for that. And then on the expense side, I know you commented you do not have a hard number that you're looking at in terms of an ability to trim. But you've taken a look at the 28 lines of business. It may be too early to say, but if you could, have you identified any particular line of business where you think you might have some more flexibility than others?

Yes, I think your view that it might be a little too early to figure that out is pretty accurate, Russell. I mean, like any operation, some businesses are going to have more opportunity than others but we're really not at that point yet.

Craig Siegenthaler, Credit Suisse.

Just had 2 follow-ups here. On the asset management trust revenue I'm just wondering, I'm sure most of that comes off an AUM base. So, 2 questions. What is the mix there of equities, fixed income, money market and what's the size of that AUM base?

The AUM base, it's not completely uniform throughout, right? So, the base is -- I want to say upwards of $10 billion. Okay, but within that base we have certain assets, and I don't have the breakout here, that are custody only versus fully managed. So, there are different pricings for those, different pricing schemes for those as well. And then there's equity versus fixed income. The majority of that portfolio, Craig, is fixed income. So, it carries with it a lower fee schedule. And equity is a minority but it carries with it a higher fee schedule.

Got it. Helpful. And then there were a few questions touched on this but if I just look at mortgage banking, $5.5 million up from $2.7 billion quarter-over-quarter. Do you know the component of that, that actually was the hedge and then also could you give us a component that was related to a wider gain on sale?

Yes, I'm -- can you break that question down again for me?

Maybe just I'm trying to think about what's the real run rate here and I know refi activity is still high in the fourth quarter but as we think further out, I'm just trying to think what is the real run rate of mortgage banking fees ex any unusual items with the hedge. So, I'm looking for what's the core run rate of revenue in that item?

Yes, it's actually a little bit lower than what we had in the third quarter of last year. But as you know, we've experienced several cycles of refinance activity that have really distorted the volumes and the results. So, I'm very hesitant to quote a normalized run rate. I'm sorry, I just don't have too much more direction I can give you on that.

No, I understand that you don't want to get pinned down to a certain level but was the hedge a material amount of revenue in the quarter or was it immaterial?

It's obviously -- it's going to be substantial, but it's typical, let's put it that way.

At this time there are no more questions. I'd like to hand it back to Cindy Wyrick for closing remarks.

Thank you Jeremy. 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 additional questions or need further clarification on any of the topics discussed today, please feel free to contact me. Thanks everyone again. Have a great day.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a good day.