Bank of Hawaii Corp (BOH) 2011 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter 2011 Bank of Hawaii Corporation earnings conference call. My name is Chris, and I will be your conference moderator for today. Presently, all participants are in listen-only mode. Later, we will facilitate a question-and-answer session. (Operator Instructions) At this time, I would now like to turn the conference over to your presenter for today, Ms. Cindy Wyrick, Director of Investor Relations. Ma'am, you may proceed.

Thank you, Chris. Good morning everyone, and thank you for joining us as we review our financial results for the fourth quarter of 2011. Joining me this morning is our Chairman, President and CEO, Peter Ho; Vice Chairman and Chief Financial Officer, Kent Lucien; and our Vice Chairman and Chief Risk Officer, Mary Sellers. Our comments today will refer to the financial information 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 the actual results may differ materially from those projected. Now, I'd like to turn the call over to Peter Ho.

Thanks, Cindy. Good morning or good afternoon everyone. We certainly appreciate your interest in listening in today. I'm going to provide you with some general comments to begin, and then I'll turn the call over to Kent, who will provide color on the quarter's financials. As is our custom, Mary will then provide an update on risk for the quarter, and I'll finish up with some concluding thoughts. Then, certainly, we'd be delighted to answer whatever questions you might have.

Bank of Hawaii posted solid results for the fourth quarter of 2011. Despite continued revenue headwinds confronting the industry, Bank of Hawaii was able to generate fully diluted earnings per share, modestly ahead of fourth quarter 2010 levels. Loans were up nicely in the quarter, in almost all categories. Average core deposits were up meaningfully, in both our consumer and commercial businesses. The number of demand accounts grew 10% and 4% respectively, in our consumer and commercial businesses in 2011. Our credit, capital and liquidity positions remain strong, and are a hallmark of our franchise. Now, let me turn the call over to Kent. Kent?

Thank you, Peter. Good morning. Net income for the fourth quarter was $39.2 million or $0.85 per share, compared to $43.3 million or $0.92 per share in the third quarter, and $40.6 million or $0.84 per share in the fourth quarter of 2010. Our return on assets in the fourth quarter was 1.17%, and return on equity was 15.2%. We reduced our share count by 1.3% in the fourth quarter, and by 4% for the full year.

Year-to-date net income was $160 million or $3.39 per share, compared to $183.9 million or $3.80 per share in 2010. We realized $6.4 million in securities gains this year, compared to $42.8 million last year. Year-to-date, return on assets was 1.22%, and return on equity was 15.7%. Our net interest margin in the fourth quarter was 3.04%, compared to 3.09% in the third quarter, and 3.15% in the fourth quarter of 2010. Year-to-date net interest margin was 3.13%, compared to 3.41% last year. The lower margin is due mainly to the lower interest rate environment.

The credit provision in the fourth quarter was $2.2 million, the same as the third quarter, and was $5.3 million in the fourth quarter of 2010. The credit provision for the fourth quarter of 2011 included net charge-offs of $7 million, and a $4.8 million decrease to the allowance. 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 equaled net charge-offs for the fourth quarter of 2010. Our allowance for loan and lease losses at the end of the fourth quarter was $138.6 million, or 2.5% of outstanding loan and leases. Non-performing assets were $40.8 million at the end of the fourth quarter, up $3 million from the third quarter, and down $3 million from the end of the fourth quarter of 2010. Included in non-performing loans are $25.3 million in residential mortgage loans as of the end of the year.

Non-interest income for the fourth quarter was $43.4 million, compared to $50.9 million in the third quarter, and $51.5 million in the fourth quarter of 2010. The decrease was primarily due to lower debit interchange revenue as a result of the Durbin Amendment, and a decrease in mortgage banking income. We retained $34 million in saleable residential mortgages in the fourth quarter, and thus maintained an overall ratio of 40% of residential mortgages to total loans. Year-to-date, non-interest income was $197.7 million, compared to $255.3 million in 2010. The decrease was primarily due to a $36.5 million decrease in securities gains, lower overdraft fees and debit interchange income. Non-interest expense totaled $84.4 million in the fourth quarter, compared to $84 million in the third quarter, and $88.7 million in the fourth quarter of 2010. The decrease from last year was primarily due to a $1.2 million accrual for a personal computer refresh program, and a $1 million contribution made to the Bank of Hawaii Foundation, both in the fourth quarter of 2010.

Year-to-date, non-interest expense was $348.2 million, compared to $346.2 million in 2010. In 2011, we had a $9 million legal settlement expense associated with overdraft litigation. We continue to be focused on achieving expense efficiency, and during the fourth quarter, we announced the consolidation of four branches in our system. The effective income tax rate was 26.1% in the fourth quarter, compared to 29.6% in the third quarter, and 24.5% in the fourth quarter of 2010. The lower rate compared to the third quarter was primarily due to the closure of three tax years, and the release of reserves for uncertain tax items. The year-to-date effective tax rate was 29.5%, compared to 29.3% in 2010.

Our investment portfolio now stands at $7.1 billion, and we have unrealized gains in the portfolio of $161 million. We repositioned at fair value approximately $950 million in the available-for-sale investment securities to be -- to the held-to-maturity category during the fourth quarter. We continue to invest on a conservative basis, and increased our investments in state and municipal securities this quarter. The average duration of the AFS portfolio is 2.22 years. Loans were $5.5 billion at the end of the fourth quarter, up [$190 million] or 3.6%, compared to the end of the third quarter, and up $203 million from the end of the fourth quarter of 2010. Deposits were $10.6 billion at the end of the fourth quarter, a $584 million or 5.8%, compared to the end of the third quarter, and up $704 million from the end of the fourth quarter of 2010. Our wholesale funding with government entities remains at $1.3 billion in the fourth quarter, and our average cost of public repurchase agreements is 7 basis points.

Our shareholders equity was $1 billion at year-end. We paid out $20.8 million in dividends in the fourth quarter, and we continued our share repurchase program in the fourth quarter, repurchasing 702,000 shares of common stock at an average cost of $41.44 per share for a total of $29.1 million. We have remaining share repurchase authority of $74 million as of year-end. Last Friday, our Board declared a dividend of $0.45 per share for the fourth quarter. Our capital position remains strong, and at the end of the fourth quarter, our TCE to risk-weighted assets was 17.9%. Now I'll turn the call over to Mary Sellers.

Thank you, Kent. Net charge-offs for the fourth quarter totaled $7 million, up $3.3 million on a linked quarter basis, and $1.7 million year-over-year. The linked period increase was primarily due to a $2.4 million increase in residential and home equity net charge-offs. For the full year, net charge-offs were $21.4 million, down $30.1 million year-over-year. Non-performing assets totaled $40.8 million, up $3 million from the third quarter, as well as year-over-year. The linked period increase was largely due to the addition of a $2.1 million commercial construction loan for a residential project on the neighbor islands. Residential mortgage non-accrual loans totaled $25.3 million at quarter end. The level of non-performing assets will continue to be impacted in the near term, due to the longer resolution time frame for residential assets.

At quarter end, loans past due 90 days or more and still accruing interest totaled $9.2 million, down $1.6 million on a linked quarter basis, and up $1.6 million year-over-year. The linked period decrease was due to a $1.2 million decrease in residential mortgage, and a $445,000 decrease in home equity. Restructured loans, not included in non-accrual loans or loans past due 90 days or more, totaled $33.7 million at quarter-end, up $563,000 from the prior quarter. Residential mortgage loans modified to assist our customers in retaining their homes accounted for $22.3 million of the total. Consistent with the gradually improving 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 the portfolio.

Our land loan portfolio totaled $18.2 million at the end of the fourth quarter, down $122,000 on a linked quarter basis, and $5.6 million year-over-year. As we've previously shared 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 at higher risk. At the end of the quarter, higher risk exposure in our residential mortgage portfolio totaled $18.5 million, down $1.8 million on a linked quarter basis, as well as year-over-year. In our home equity portfolio, higher risk exposure totaled $21.4 million, down $908,000 on a linked quarter basis, and down $1.8 million year-over-year.

At the end of the fourth quarter, residential mortgage loans delinquent 30 to 89 days totaled $18.1 million, down $3.3 million on a linked quarter basis, and up $702,000 year-over-year. Home equity lines and loans delinquent 30 to 89 days totaled $8 million, which is flat on a linked quarter basis, and up $1.3 million year-over-year. Commercial construction loans totaled $98.7 million at the end of the quarter, up $29 million on a linked quarter basis, and $18.3 million year-over-year, driven off the funding of a low-income senior rental project on Oahu. Residential home building exposure totaled $29 million at quarter-end, with higher risk exposure of $13.5 million, down $1.9 million from the third quarter, and down $1.5 million year-over-year.

For the fourth quarter, the provision for loan and lease losses was $2.2 million, which given net charge-offs of $7 million reduced the allowance by $4.8 million to $138.6 million, or 2.5% of outstanding loans and leases. Absent significant deterioration in the economy, and assuming continued improvement and -- or stability in credit quality, we anticipate that we will require a lower level of allowance going forward. I'll now turn the call back to Peter.

Great. Thanks, Mary. Economic conditions in Hawaii remain stable. Our key visitor segment continues to perform well. For the first 11 months of 2011, visitor arrivals were up 3.4%, total visitor days were up 4.9%, and perhaps most importantly, total visitor spend was up 15%.

55% of that spending increase came from international markets -- including Japan, Australia, Korea, New Zealand and China. The Asia-Pacific and oceanic markets are growing in importance to us, comprising 41% of overall spend year-to-date, versus 37% last year. President Obama's recent executive order aimed at increasing international tourism to the United States may have a meaningful impact on our markets in the coming days. Unemployment levels in Hawaii remain below that of the US as a whole.

Residential real estate values remain stable. While residential sales activity has been somewhat lackluster, I would note that single family inventory levels are now below five months. In short, we remain cautiously optimistic in the near-term economic prospects for our island markets. Now we would be happy to address your questions.

Thank you. (Operator Instructions). Our first question comes from the line of Aaron Deer of Sandler O'Neill & Partners. You may proceed.

Congratulations on the very strong loan growth you had in the quarter. I've got a question, and Mary you might have mentioned this, but I was having a hard time keeping up with your comments. Of the construction growth that you showed in the quarter, how much of that was commercial versus residential?

We had -- it all came primarily from a low-income senior rental project on Oahu.

Okay. And given the growth that you've been showing in the overall portfolio, I'm just kind of curious what your outlook is for 2011, if this is a sustainable pace, or if it just had a lot of originations that happened to be completed in the fourth quarter, and I guess how is the pipeline is shaping up, looking ahead?

Okay. So outlook for 2012, Aaron, is our commercial growth has been pretty strong for a few quarters now. I guess if I were to handicap it, I would say that we had a pretty good size bulge into the fourth quarter pipeline-wise, but we anticipate pretty good activity in the commercial business in 2012. The consumer book is something that I think as you know, we've been working on for a while now, and going into the teeth of the last credit downturn, we really pulled back on our consumer businesses and products, and have been working really for the past year to get that business wound up again.

So I was most pleased to see growth, albeit pretty nominal in the consumer business for Q4, and our hope is that we've got those products off and running again. What infills from that is our residential mortgage book, and Kent alluded a little bit to the proportionality that we're trying to get there. Basically our commercial and consumer and resi book is 40% commercial, 40% residential, 20% consumer. So as we get growth in consumer and commercial, we generally like to bring up our residential exposure to keep those proportions in place. So overall, I think we're hopeful of reasonable balance. We're hopeful of reasonable growth in 2012. Of course, that's going to be dependent on a continued healthy outlook here economically in this market.

All right. And then just one more, if I may, and I'll step back. With the strong balance sheet growth that you've had, and you've obviously been very active with your share repurchases, I'm just curious if you can tell us where you're comfortable letting your capital ratios go to, and if there's one ratio in particular that we should be focused on as maybe a target level.

Aaron, as I've mentioned in previous calls, we take a multi-dimension view on capital management, and so we're looking not only as ratios, we're looking at the economy, we're looking at credit. We're looking at our own capital generation capability, so I don't want to point you to any particular ratio, other than to say that we look at it from a lot of different viewpoints, and we really do it a quarter at a time. We look at these factors each quarter, in deciding the dimension of the repurchase activity.

Okay. Thank you.

Our next question comes from the line of Jeff Rulis of D.A. Davidson. You may proceed.

I had a question on the time deposits, and just kind of thinking about the margin. Is there any level of time deposits, I guess maturing in the next few quarters, if you've got those by buckets?

We don't -- to be honest, I'm not sure we have a whole lot of strategy around our timed deposit pricing. It really is a somewhat junior portion of our overall deposit base, and frankly strategy. And given the liquidity that we have and given the growth we've had on the core deposit side, we frankly have been letting those timed deposits come down quarter to quarter. Really I think our focus there is to have a product available to our consumer base, our consumer customers, to the extent that they want that kind of product, it's there for them. But we really don't have a growth strategy or targeted strategy around that particular bucket.

Peter, put another way, I was just trying to get to given your cost of funds on a relative basis is pretty low, I guess maybe comment on your confidence of how much lower you could lower the cost of funds portion?

Not much lower.

Okay. Okay.

Yes. It's -- I think we are approaching the ground here.

Got it.

Our next question comes from the line of Craig Siegenthaler of Credit Suisse. You may proceed.

First, just on the securities portfolio. I know this size is really dependent on kind of future loan and deposit growth, but can you talk about your plans in terms of how this $7.2 billion portfolio really could change over the next couple quarters here?

Well, as you mentioned, it's somewhat dependent on the other factors, but other than putting a little bit more emphasis on municipal securities, I wouldn't anticipate much of a change in the composition. Again, the size may vary a little bit, the overall size may vary a little bit, depending on loan growth and deposit growth, but the composition and the strategy other than the municipal securities, is pretty much steady as she goes.

And what is your new money yield tax effective on the municipal securities, and also, should we think about all new securities acquisitions going into the held-to-maturity bucket and not the available-for-sale bucket?

Well, as to your latter point, we're really trying to keep a pretty even balance between the two buckets, AFS and held-to-maturity. On the yield, kind of the recent examples -- and it's really dependent on the market at the time, but into the fourth quarter, we were adding municipal securities at a tax effective yield of about 2.78%, but as I've said, that can change as market conditions change. And overall, into the fourth quarter, we were adding into the portfolio at an average of 2.37%, and the runoff was at 2.52%.

Okay. So just in conclusion, it sounds like excess deposit growth over loan growth will go into the securities portfolio at a 50/50 mix, roughly, into the available-for-sale and held-to-maturity?

Generally, yes.

Okay. Great. Thanks for taking my questions.

Our next question comes from the line of Brett Rabatin of Sterne Agee. You may proceed.

Wanted to ask first kind of a follow-up question on the capital issues, just the share repurchases I saw slowed after year-end. Can you give some thoughts on the buyback pace going forward? Particularly if deposit growth continues to be pretty solid?

Yes, I wouldn't get too excited about the activity after year-end. As you know, we have to basically designate the pricing and the quantity rules well in advance of the end of the quarter. So it really doesn't reflect any particular judgment, or doesn't really mean that much for that short period of time. So, I mean, as to the overall capital program, I think I discussed it earlier. We still think it's valuable to the shareholders. We still think it's important and accretive. But as I also mentioned we'll the take it one quarter at a time.

Okay. And then the other thing I wanted to ask is around just fee income, a lot of banks have the Durbin headwind or are looking at a lot of initiatives to try and replace the fee income, and I was just curious, I know you guys have gone through a process of thinking about fees and how to go about that in the proper fashion. I was curious for maybe some color around your thoughts on that in 2012 and just kind of the 4Q pace of fee income, is that a level to build off of or is that kind of the run rate in.

Yes, Brett, this is Peter. I think that for a good portion of last year, there was a fair amount of sentiment that adding fees into the overall pricing mix of core checking accounts would be something that could help offset the loss of fees in other areas. As you know, that's really not a path that we have followed, so where we are is we're focused on building back profitability in ways other than simply up-pricing the same product.

And so we're focused on where can we find more profitable customers, where can we retain, or how do we retain the profitable customers that we already have, so it's a little bit more of a volume game for us. I guess the other thing that I would add in there is, as Kent mentioned, we're looking at the overall cost structure of the delivery system against kind of the new base profitability of the products. And there I think we've got some opportunity to improve efficiency hopefully, and importantly while not impairing the overall experience for our customer base. That's the angle we're taking.

Okay. Great. Thanks for the color.

Our next question comes from the line of Joe Morford of RBC. You may proceed.

First, just really just a follow-up to your comments on -- to Aaron's question. So are we to take the growth in residential mortgage this quarter as more of kind of a one-time true-up to maintain that percentage, and thus all else being equal, should mortgage banking revenues pick up again going forward or -- and then you just adjust that, again that portfolio mix based on growth in other categories eventually?

Let me change your presumption a little bit. So we did retain mortgages into the fourth quarter that were otherwise saleable. That will probably continue somewhat into the first quarter. Again, we're trying to keep an even balance in resi mortgage, with the rest of the loan portfolio. To the extent we have other growth attributes in the loan portfolio, we need to keep the resi mortgage in line with that. So we may see some additional retention in at least the first quarter. It may continue a little bit into the second quarter as well.

Okay. And then second, just more broadly, any thoughts on your ability to continue to hold net interest income flat, or could we possibly even see some growth here in 2012?

Well, growing loans is really the first step to maintaining the margin, and so that's key for us. Adding municipal securities into the investment portfolio, that's another way for us to garner a little bit higher yield, but after that, it's pretty much environmental. So what happens in the interest rate environment is, to a very large degree, going to determine the outcome.

Okay. All right. Thanks very much.

Our next question comes from the line of Brian Zabora of Stifel Nicolaus. You may proceed.

A question on your deposits. A lot of the growth this quarter was public and other. Just wanted to see if you had any sense of how sticky that may be, or was that year-end related?

It was really as a result of liquidity coming into the state coffers as the result of some capital markets activity, so the timing on that is a bit uncertain. We have some of that layered out on a time -- in a time structure. So there was good activity on the institutional side in Q4. There was also good activity on kind of our core consumer and business segments as well. Core deposits in consumer were up just about 2%, average core deposits in consumer were up just about 2%, and average core deposits in our business lines were up 1.7%. So we did see strong growth in the institutional side. We also saw very good growth in our key business and consumer lines as well, Brian.

Does that indicate maybe the size of the balance sheet, depending on how sticky those public -- excluding the other strong deposits elsewhere, but if the public deposits kind of run off, could we see the balance sheet shrink maybe in the next quarter or so, or is it tough to predict?

It's possible. It might decrease slightly. Hard to know.

Lastly, could you talk a little about loan pricing? Obviously, you talked about the good growth. Some of the loan yields were down a bit from third quarter, so I just wanted to see how that is -- the balance between growth and pricing.

Well, I think we're trying very hard to maintain pricing discipline. Having said that, there's a good premium on loans versus investments, and we're not the only bank in town that's figured that out. So it's a pretty competitive environment, but we run everything, as you know, as return on capital. So we'll make lending decisions and pricing decisions, if it makes sense for us, from a return standpoint. That's really kind of the core of how we decision things. But I would add that it's getting pretty competitive out there.

Thanks for taking my questions.

Our next question comes from the line of Casey Haire of Jefferies. You may proceed.

So just a follow-up, I guess on some of the loan yield questions. So the commercial mortgage yield, that had been pretty stable. It took a pretty big hit this quarter. Was that more just pricing pressure, or was that a lack of pre-pay penalties in the fourth quarter?

I'm not sure about the pre-pay side. I would say, though, that there's been a good amount of growth in the commercial mortgage portfolio in general from quarter-to-quarter-to-quarter. And obviously, the yield environment's come down over the past year or so. So I think that's a lot of what you're seeing in the yield.

Okay. And then within the securities book, the held-to-maturity bucket took a pretty big hit. Was that -- was a lot of that premium amortization that we may get a snapback in the first quarter?

Well, it's the same factors that we've been talking about. It's the fact that we're -- that runoff is at a higher yield than the repurchase. That's the main factor.

So nothing accelerated just due to premium amortization then?

No.

Okay. And then just switching quickly to expenses, with this 60% efficiency ratio, obviously Reg E and overdraft is hurting profitability. Just was curious, as you look out, you consolidated some branches. As you look ahead to 2012 in the still tough revenue environment, do you think you can live below that 60% level?

Well, reducing expenses on an absolute basis is important to us. The ratio, as I think I've pointed out in the past is a function of the income. But certainly, we're on the course of becoming even more efficient and reducing the overall level of expenses, and even in 2011, when you subtract the legal settlement, which with $9 million for a year, we did accomplish about a 2% reduction in total expenses in 2011. So in this environment, it's critical for us to do that. Consolidating four branches, as I mentioned, is a step in that direction.

Okay. Thanks for taking my questions.

Our next question comes from the line of Jacque Chimera of KBW. You may proceed.

Just had a question on the C&I portfolio. I have in my notes that at the end of the last quarter, there were some paydowns right at the end, and that the average balances were higher. Looking to the growth in the fourth quarter, did that have any effect on it?

C&I was down on average about 2%.

In the fourth quarter?

In the fourth quarter.

So was it a run-up on lines at the end of the quarter then, so kind of the opposite of what happened in the third quarter?

Well, I think what happened in the -- I think when comparing quarter-on-quarter on a linked basis, the fact that we lost some outstandings late in the third quarter had a dilutive impact on our average comparison for the fourth quarter, because we're starting out at a lower base at the beginning of the fourth quarter.

Okay. Versus -- okay.

Right. And then I will say that we just had some paydowns on existing lines that just people had extra liquidity towards year-end, and just applied it to their loans rather than holding it as cash.

So was most of the growth in the quarter from new customers, then?

On the C&I side, I think it was kind of existing customers flowing in and out.

Okay.

Our next question comes from the line of Russell Gunther of Bank of America-Merrill Lynch. You may proceed.

Just wanted to circle back up on the non-interest expense side, in light of the comments on reducing expenses on an absolute basis, and the branch closures that were announced. If we look at the fourth quarter, didn't look like any one-timers in there at all. Is the thought in terms of magnitude that you could be able to reduce the expense base off of this, off of an annualized 4Q 2011?

Well, fourth quarter is hard to extrapolate from just that one period. As I mentioned earlier, the full-year expenses were down about 2%. I'm not going to either promise or forecast that kind of result into 2012, but directionally, that's the kind of result we're looking for.

Okay. That's helpful. And then just with regard to loan growth on the commercial side, any key or big new hires that are going to help you be able to continue to take share and maybe see this type of loan growth going forward?

Well, the growth in our commercial mortgage book in 2011 was in fact as a result of some key and very successful hires that we brought in a while back. I'd say moving forward, we're looking to grow the book. It may be a little bit more muted, and especially on the commercial mortgage side, simply because we've had some success of late, and secondly, because the area of emphasis that we're moving towards is more to the down markets, smaller, middle market segment, I'm talking $1 million, $2 million size mortgages, so a nice business, kind of a nice portfolio of loans, but it just takes an awful lot of those to create meaningful growth in any particular quarter. So we have brought in, gee, I want to say upwards of 10 folks, to staff that particular segment of the market. I think it's going to be very good for us longer-term but it's going to take a while to ramp up.

All right. And then -- thank you for that. Maybe a bigger picture question on the fee income side. Any appetite for considering M&A for a fee-producing business, maybe along these lines, credit card portfolio, maybe getting a -- doing a wholesale purchase to get the ball rolling?

Well, credit card is a product that we don't have today, at least from a balance sheet standpoint in our portfolio. And I think given what's happening in -- on the debit front, it's certainly something worth considering very seriously. So in terms of product, that's what I would say. In terms of additional businesses that are fee-generating, I think to get more profitability is what you're alluding to, it's always something we're interested in pursuing to the extent that it exists here in our home market, and is the type of product that we can I guess get our arms around from a franchise standpoint. But other than that, there's nothing really on the horizon.

Okay. And then lastly, just if you could give us a little guidance on the tax rate, what you're looking for in 2012?

Yes, unfortunately I have to give you a pretty wide range, just the nature of the area, and I think I made this comment in the past that we could be looking at between 30% and 35% effective rate. I realize that's a wide range, but that's just the nature of that area.

Understood. I appreciate that. All right, guys. Thanks for taking my questions.

(Operator Instructions). Our next question comes from the line of Bryce Rowe of Robert W. Baird. You may proceed.

Hi, thanks. Most of the topics I wanted to cover were asked. Just one more question. In the loan portfolio, the other consumer loans jumped by about $25 million. I just wanted to know what that was tied to?

We had a specific marketing effort that targeted our existing client base with strong deposit relationships, and strong financial profiles, and given we had been out of the market for a period of time, we were pretty successful with that.

Okay. Thank you.

We have no further questions at this time. I would now like to turn the call back over to the presenters for any closing remarks.

Thank you very much, Chris. I'd like to thank all of you for joining us today and for your continued interest in 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 so much for your participation, you may now disconnect. Have a great day.