Central Pacific Financial Corp (CPF) 2023 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the Central Pacific Financial Corp fourth quarter 2023 conference call. During today's presentation, all parties will be in a listen-only mode following the presentation. The conference will be open for questions. This call is being recorded and will be available for replay shortly after its completion on the Company's website at www.CPB. Dot Bank.

女士們、先生們，午安。感謝您的耐心等待，歡迎參加中央太平洋金融公司 2023 年第四季電話會議。在今天的演示期間，所有各方都將在演示結束後處於僅聽模式。會議將開放提問。該電話會議正在錄音，完成後不久將在公司網站 www.CPB 上重播。點銀行。

And with that, I'd like to turn the call over to Ms. Dayna Matsumoto, Group Senior Vice President and Director of Finance and Accounting. Please go ahead.

接下來，我想將電話轉接給集團資深副總裁兼財務與會計總監 Dayna Matsumoto 女士。請繼續。

Thank you, Greg, and thank you all for joining us as we review the financial results of the fourth quarter of 2023 for Central Pacific Financial Corp. With me this morning are Arnold Martines, President and Chief Executive Officer; David Morimoto, Senior Executive Vice President and Chief Financial Officer; and Anna Hu, Executive Vice President and Chief Credit Officer.

謝謝格雷格，也感謝大家與我們一起回顧中央太平洋金融公司 2023 年第四季度的財務業績。今天早上與我在一起的是總裁兼首席執行官阿諾德·馬丁斯 (Arnold Martines)； David Morimoto，資深執行副總裁兼財務長；胡安娜，執行副總裁兼首席信貸官。

We have prepared a supplemental slide presentation that provides additional details on our release and is available in the Investor Relations section of our website at CPB. typing during the course of today's call, management may make forward-looking statements. While we believe these statements are based on reasonable assumptions, they involve risks that may cause actual results to differ materially from those projected for a complete discussion of the risks related to our forward-looking statements. Please refer to slide 2 of our presentation, and now I'll turn the call over to our President and CEO, Arnold Martines.

我們準備了補充幻燈片演示，提供有關我們發布的更多詳細信息，可在 CPB 網站的投資者關係部分獲取。在今天的電話會議中，管理階層可能會做出前瞻性陳述。雖然我們相信這些陳述是基於合理的假設，但它們涉及的風險可能導致實際結果與我們對前瞻性陳述相關風險的完整討論所預測的結果有重大差異。請參閱我們簡報的幻燈片 2，現在我將把電話轉給我們的總裁兼執行長 Arnold Martines。

Thank you, Dayna, and hello, everyone. We appreciate your interest in Central Pacific Financial Corp., and we are pleased to share with you our latest updates and results. We are proud of the recognition we recently received by Newsweek as one of the best regional banks in America for 2024. Also, in a few weeks, we will celebrate our 70th anniversary as an honor to lead this institution and continue our legacy of supporting the communities.

謝謝你，戴娜，大家好。我們感謝您對中央太平洋金融公司的興趣，我們很高興與您分享我們的最新動態和結果。我們最近被《新聞周刊》評為 2024 年美國最佳區域銀行之一，對此我們感到非常自豪。此外，幾週後，我們將慶祝成立 70 週年，榮幸地領導這個機構並繼續我們支持社區的傳統。

2023 was another strong year for us as we successfully navigated the operating environment challenges while continuing to deliver solid results. We have a strong balance sheet and our balanced growth strategy positions us extremely well for the future.

2023 年對我們來說又是強勁的一年，我們成功應對了營運環境挑戰，同時繼續交付紮實的成果。我們擁有強大的資產負債表和平衡的成長策略，為我們的未來奠定了良好的基礎。

During the fourth quarter, we completed a few balance sheet repositioning transactions that were good opportunities to gain greater future returns and efficiencies. We will continue to pursue similar opportunities and aligned with our strategy in 2024. The team will provide additional detail and insights on our fourth quarter financial and credit metrics. But let me start first with an update on the Hawaiian market. The Hawaii tourism industry continues to do well with male visitors recovering faster than anticipated in the month of December. Visitor arrivals Tamale were 75% of the previous year, and total statewide arrivals were 90% of pre-pandemic 2019. Statewide visitors from Japan continue to increase up 92% from a year ago, but still lagging pre pandemic levels at only 49% at 2019. Total visitor spending was $1.96 billion in December, down 1% from a year ago and up 12% from December 2019. Total hotel occupancy in December, it was 72%, up 0.7% from a year ago with an average daily rate of $428, down 3% from a year ago.

在第四季度，我們完成了一些資產負債表重新定位交易，這是獲得更大未來回報和效率的好機會。我們將繼續尋求類似的機會，並與我們 2024 年的策略保持一致。團隊將提供有關我們第四季度財務和信用指標的更多詳細資訊和見解。首先讓我介紹一下夏威夷市場的最新情況。夏威夷旅遊業持續表現良好，12 月男性遊客的恢復速度快於預期。塔馬利遊客人數是去年的 75%，全州遊客總數是 2019 年疫情爆發前的 90%。來自日本的全州遊客持續比一年前成長 92%，但仍落後於疫情前的水平，2019 年僅為 49%。12 月遊客總支出為 19.6 億美元，年減 1%，較 2019 年 12 月成長 12%。12月飯店總入住率為72%，較去年成長0.7%，每日平均房價為428美元，較去年同期下降3%。

Hawaii's statewide seasonally adjusted unemployment rate was 2.9% in December and continues to outperform the national unemployment rate of 3.7%. The University of Hawaii Economic Research Organization forecasts the state unemployment rate to remain very low at 2.5% in 2024. Real estate values in Hawaii are consistently strong in December for Oahu. Median single-family home price was $1 million and the median condo sales price was 510,000. Home sale volumes continue to be down year over year but with mortgage rates recently declining slightly, we are starting to see an increase in contract signings and with limited inventory properties continue to move quickly in our markets. Overall, we are optimistic about Hawaii's economic outlook. While the state faces some headwinds and uncertainty, Hawaii's economy is proving to be resilient, and we hope to turn unfortunate events like the Mali wildfires into opportunities to rebuild and to make our island communities stronger in the future.

夏威夷 12 月全州季節性調整失業率為 2.9%，持續跑贏全國 3.7% 的失業率。夏威夷大學經濟研究組織預測，2024 年該州失業率將維持在 2.5% 的極低水準。夏威夷歐胡島的房地產價值在 12 月持續強勁。單戶住宅中位數價格為 100 萬美元，公寓銷售價格中位數為 51 萬美元。房屋銷售量繼續同比下降，但隨著抵押貸款利率最近略有下降，我們開始看到合約簽署量增加，並且庫存有限的房產繼續在我們的市場上快速移動。整體而言，我們對夏威夷的經濟前景持樂觀態度。儘管該州面臨一些阻力和不確定性，但夏威夷的經濟被證明具有彈性，我們希望將馬利野火等不幸事件轉化為重建的機會，並使我們的島嶼社區在未來更加強大。

I'll now turn the call over to David Morimoto, our Chief Financial Officer. David?

現在我將把電話轉給我們的財務長 David Morimoto。大衛？

Thank you, Arnold. Turning to our earnings results. Net income for the fourth quarter was $14.9 million, or $0.55 per diluted share. Return on assets -- return on average assets was 0.79%. Return on average equity was 12.55% and our efficiency ratio was 64.12% at year end. Our balance sheet reflected further strengthening of our liquidity position with higher levels of cash as we continue to be balanced with our loan growth.

謝謝你，阿諾德。轉向我們的獲利結果。第四季淨利為 1,490 萬美元，或攤薄後每股收益 0.55 美元。資產報酬率－平均資產報酬率為0.79%。年末平均股本回報率為12.55%，效率率為64.12%。隨著我們繼續與貸款成長保持平衡，我們的資產負債表反映出我們的流動性狀況進一步增強，現金水準更高。

Our total loan portfolio decreased by $7 million or 1.3% sequential quarter, primarily due to us continuing to let our mainland loan portfolio runoff and partially offset by growth in our home, our Hawaii commercial real estate and CNI portfolio, our total deposit portfolio decreased by $27 million or 0.4% sequential quarter as we ran off some higher-cost government time deposits. Total core deposits remained relatively flat despite some continued migration from demand deposits to CDs. From an average balance standpoint, the trends indicate the movement out of noninterest-bearing DDA is continuing to slow net interest income for the fourth quarter was $51.1 million and decreased by $0.8 million from the prior quarter, primarily due to higher funding costs. The net interest margin was 2.84 in the fourth quarter, a decline of four basis points sequential quarter. Our total cost of deposits was 1.22% in the fourth quarter and our cycle to date, total deposit repricing beta was 23%, which remains within our expectations for margin compression continues to narrow. And with that positive trend as well as the expected benefit from our pay fix. We see float swap. We expect our NAM to trough in the first half of this year. As Arnaud mentioned, during the fourth quarter, we completed a balance sheet repositioning, where we sold an office real estate building and utilized a $5.1 million pretax gain to improve prospective earnings through an investment portfolio restructuring of approximately $30 million at a loss of $1.9 million in a branch lease termination, where we incurred a one-part one-time charge of $2.3 million. Overall, the three nonrecurring transactions positions our balance sheet for improved future performance, which we estimate to be an increase to annual pretax income of $2 million.

我們的總貸款組合比上一季減少了700 萬美元，即1.3%，主要是由於我們繼續讓大陸貸款組合流失，並部分被我們的住宅、夏威夷商業房地產和CNI 投資組合的增長所抵消，我們的總存款組合減少了由於我們動用了一些成本較高的政府定期存款，導致本季損失 2,700 萬美元，即 0.4%。儘管一些存款繼續從活期存款轉向定期存款，但核心存款總額仍相對持平。從平均餘額的角度來看，趨勢表明，無息 DDA 的流出繼續放緩，第四季度淨利息收入為 5,110 萬美元，比上一季減少 80 萬美元，主要是由於融資成本上升。第四季淨利差為2.84，季減4個基點。第四季我們的總存款成本為 1.22%，迄今為止的周期，總存款重新定價貝塔值為 23%，這仍然在我們對利潤率壓縮繼續收窄的預期之內。伴隨著這種正面的趨勢以及我們的薪酬調整所帶來的預期效益。我們看到浮動交換。我們預計 NAM 將在今年上半年觸底。正如阿諾所提到的，在第四季度，我們完成了資產負債表的重新定位，出售了一棟辦公房地產，並利用510 萬美元的稅前收益，透過約3000 萬美元的投資組合重組（虧損190 萬美元）來提高預期收益。在一次分店租賃終止中，我們支付了 230 萬美元的一次性費用。總體而言，這三項非經常性交易使我們的資產負債表能夠改善未來業績，我們估計每年稅前收入將增加 200 萬美元。

Fourth quarter other operating income was $15.2 million, which includes the aforementioned gain on office sale and investment portfolio restructuring loss. Additionally, we had higher moly income in the fourth quarter, which was driven by the equity market rally and offset by higher deferred compensation expense. Other operating expenses totaled $42.5 million in the fourth quarter. It included the charge on the early branch lease terminations. Our effective tax rate declined to 22.3% in the fourth quarter, primarily due to higher tax-exempt only income. Going forward, we expect our normalized effective tax rate to be 24% to 25%. During the fourth quarter, we did not repurchase any shares.

其他在第四季度營業收入為 1,520 萬美元，其中包括上述辦公室銷售收益和投資組合重組損失。此外，我們第四季的鉬收入較高，這是由股市上漲所推動的，但卻被較高的遞延補償費用所抵消。第四季其他營運費用總計 4,250 萬美元。其中包括提前終止分行租賃的費用。第四季我們的有效稅率下降至 22.3%，主要是因為免稅收入增加。展望未來，我們預期正常化有效稅率為 24% 至 25%。第四季度，我們沒有回購任何股票。

Finally, our Board of Directors declared a quarterly cash dividend of $0.26 per share, payable on March 15 to shareholders of record on February 29. Our Board of Directors also authorized a new share repurchase plan to repurchase up to 20 million of our common stock in 2024.

最後，我們的董事會宣布每股 0.26 美元的季度現金股息，將於 3 月 15 日支付給 2 月 29 日登記在冊的股東。我們的董事會也批准了一項新的股票回購計劃，將於 2024 年回購最多 2,000 萬股普通股。

I'll now turn the call over to Anna Hu, our Chief Credit Officer.

現在我將把電話轉給我們的首席信貸官 Anna Hu。

Anna and keeping and asset quality remained strong in the fourth quarter with nonperforming assets at nine basis points of total assets and criticized loans decreasing to 0.92% of total loans. Our loan portfolio continues to be well diversified by loan type and industry sector. Over 75% of the loan portfolio is real estate secured with a weighted average loan-to-value of 62%. Our commercial real estate portfolio represents 25% of total loans and is diversified across all asset types, with 8% of outstanding balances in this portfolio maturing in 2024. Our commercial real estate office and retail exposure remains low at 3.5% and 4.8% of total loans, respectively.

第四季安娜和資產品質依然強勁，不良資產佔總資產的 9 個基點，批評貸款佔貸款總額的比例降至 0.92%。我們的貸款組合繼續按貸款類型和行業領域實現多元化。超過 75% 的貸款組合是房地產擔保，加權平均貸款價值比為 62%。我們的商業房地產投資組合佔貸款總額的 25%，並且在所有資產類型中實現多元化，該投資組合中 8% 的未償餘額將於 2024 年到期。我們的商業房地產辦公室和零售風險敞口仍然較低，分別佔總貸款的 3.5% 和 4.8%。

The office portfolio has a weighted average loan-to-value of 56% and 71 weighted average months to maturity. Our retail portfolio has a weighted average loan-to-value of 64% and 61 weighted average months to maturity by loan exposure to them. The Highland Valley area was $111 million or 2% of total loans before the August wildfires. Since then, balances have paid down slightly to $103 million or 1.9% of total loans as of December 31. We estimate that $90 million or 87% of the total behind male loans outstanding were not directly impacted by the wildfire and $11 million or 11% that were directly impacted have sufficient insurance and land value coverage.

辦公室投資組合的加權平均貸款價值比為 56%，加權平均到期期限為 71 個月。我們的零售投資組合的加權平均貸款價值比為 64%，以貸款風險敞口計算，加權平均到期期限為 61 個月。在 8 月山火發生之前，高地谷地區的貸款額為 1.11 億美元，佔貸款總額的 2%。此後，截至 12 月 31 日，餘額略有減少至 1.03 億美元，佔貸款總額的 1.9%。我們估計，男性未償還貸款總額中的 9,000 萬美元（即 87%）沒有受到野火的直接影響，而直接受到影響的 1,100 萬美元（即 11%）擁有足夠的保險和土地價值保障。

We are monitoring the remaining $2 million of the higher loan, which includes primarily consumer, unsecured and small business loans. The US mainland loan portfolio continued to decline during the fourth quarter due to the continued runoff in the mainland consumer portfolio for $308 million or 5.7% of total loans as of December 31 compared to $452 million a year ago.

我們正在監控剩餘 200 萬美元的高額貸款，其中主要包括消費者貸款、無擔保貸款和小型企業貸款。由於大陸消費者投資組合持續流失，美國大陸貸款組合在第四季度繼續下降，截至 12 月 31 日，其貸款總額為 3.08 億美元，佔貸款總額的 5.7%，而一年前為 4.52 億美元。

Net charge-offs were $5.5 million for the fourth quarter, which equates to 41 basis points annualized as a percent of average loans increase in net charge-offs were primarily from our mainland consumer portfolio. This portfolio continues to run-off as new purchases remain on hold as a prudent measure. With that said, we believe that our losses in this portfolio have peaked and will improve going forward.

第四季淨沖銷額為 550 萬美元，相當於年化 41 個基點，因為淨沖銷額佔平均貸款成長的百分比主要來自我們大陸的消費投資組合。作為審慎措施，新的採購仍處於擱置狀態，因此該投資組合持續縮減。話雖如此，我們相信該投資組合的損失已經達到頂峰，並將在未來有所改善。

Overall, our loan portfolio remains solid. Our allowance for credit losses was $63.9 million or 1.18% of outstanding loans in the fourth quarter, we recorded a $5 million provision for credit losses on loans primarily due to net charge-off. Additionally, we recorded a $0.3 million credit to the provision for unfunded commitments, a total provision for credit losses of $4.7 million during the quarter. Overall, our strong risk management culture and conservative underwriting policies continue to serve us well. Our loan portfolio. Credit quality remains strong and we continue to monitor the economic environment closely.

總體而言，我們的貸款組合仍然穩健。我們的信貸損失準備金為 6,390 萬美元，佔第四季度未償貸款的 1.18%，我們記錄了 500 萬美元的貸款信貸損失準備金，主要是由於淨沖銷。此外，我們還記錄了 30 萬美元的信貸損失準備金，本季的信貸損失準備金總額為 470 萬美元。總體而言，我們強大的風險管理文化和保守的承保政策繼續為我們提供良好服務。我們的貸款組合。信貸品質依然強勁，我們持續密切監控經濟環境。

Now I'll turn the call back to Arnold.

現在我將把電話轉回給阿諾德。

Thank you, Anna. In summary, we are pleased with our progress and results for 2023. We believe with our strong liquidity, capital and credit, we are well positioned to continue to deliver results with a focus on our mission of serving our customers and the broader community as we celebrate our 70 years of serving Hawaii this year.

謝謝你，安娜。總而言之，我們對 2023 年的進展和成果感到滿意。我們相信，憑藉強大的流動性、資本和信用，我們有能力繼續取得成果，專注於服務客戶和更廣泛社區的使命，今年我們將慶祝我們為夏威夷服務 70 週年。

I want to thank you for your continued support and confidence in our organization. At this time, we will be happy to address any questions you may have.

我要感謝您對我們組織的持續支持和信任。目前，我們很樂意解答您的任何問題。

(Operator Instructions) David Feaster, Raymond James.

（操作員說明）David Feaster，Raymond James。

Good morning, everybody. Maybe just high level. I'd like to start on on how you think about and potential impacts of Fed cuts. Obviously, that's that would benefit on the credit side. But is your sense there that maybe there's a decent amount of pent-up loan demand and we can see loan growth accelerate, especially on the mortgage front. Maybe just how do you think about your ability to reprice deposits lower if we do get fed cuts.

大家早安。也許只是高水準。我想先談談您如何看待聯準會降息及其潛在影響。顯然，這將有利於信貸方面。但您是否感覺到，可能存在大量被壓抑的貸款需求，我們可以看到貸款成長加速，尤其是在抵押貸款方面。如果聯準會確實降息，也許您如何看待您將存款重新定價較低的能力。

Yes. Thanks, Dave. This is Arno. I'll start and then I'll turn it over to David for a present for you. The second part of your question with regard to the loan growth side of it, and we do feel good about about that this year. We think that the operating environment is going to normalize a bit of capacity better than last year for sure. So we're building a strong loan pipeline as we move into the first half of 2024. We see most of the activity in the CRE and C&I loan categories. But we do expect the residential and home equity and small business to also support the growth in 2024. As you know, we continue to lap the mainland consumer loan portfolio runoff until we have better visibility on what happens in the US continent from an economic perspective.

是的。謝謝，戴夫。這是阿諾。我先開始，然後把它交給大衛當禮物送給你。你問題的第二部分是關於貸款成長的，我們今年確實對此感覺良好。我們認為，營運環境肯定會比去年更好地使產能正常化。因此，進入 2024 年上半年，我們正在建立強大的貸款管道。我們看到大部分活動屬於商業房地產和商業及工業貸款類別。但我們確實預計住宅和房屋淨值以及小型企業也將支持 2024 年的成長。如您所知，我們將繼續關注大陸消費貸款組合的徑流，直到我們從經濟角度更好地了解美國大陸發生的情況。

So with all that said, we anticipate our full year 2020 for loan growth to be in the low single digit percentage range.

綜上所述，我們預計 2020 年全年貸款成長將處於較低的個位數百分比範圍內。

I'll just add that we see Q1 as a transitional quarter for loan growth given that some folks are waiting to see what happens with the interest rates to your to your point earlier. But all in all, we anticipate an improving operating environment supported by Hawaii's resilient economy. And I have to tell you our bankers are excited and engaged for what we hope to be a good year to help our customers achieve their broader investment goals.

我只想補充一點，我們認為第一季是貸款成長的過渡季度，因為有些人正在等待利率提前達到您的水平會發生什麼情況。但總而言之，我們預期在夏威夷彈性經濟的支持下，營運環境將會改善。我必須告訴您，我們的銀行家非常興奮並致力於迎接美好的一年，以幫助我們的客戶實現更廣泛的投資目標。

So let me maybe have David cover some of the repricing, a part of your question.

因此，也許讓大衛來回答一些重新定價的問題，這是你問題的一部分。

Yeah. On on the potential for rate cuts and what our plans are on the deposit pricing side. You know, as we saw last year on, we implemented a product segmentation strategy, we created some higher yield options for our customers that we're seeking on higher yields. And then those those accounts obviously have high betas and on. So we would anticipate that those high beta accounts would react pretty much, 100%, 100% beta with the move in market rate.

是的。關於降息的可能性以及我們在存款定價方面的計劃。你知道，正如我們去年所看到的，我們實施了產品細分策略，我們為尋求更高收益的客戶創造了一些更高收益的選擇。然後這些帳戶顯然有很高的貝塔值等等。因此，我們預期那些高 Beta 帳戶會對市場利率的變動做出 100%、100% Beta 的反應。

So on an overall basis in our expectations is that rate cut would be somewhat beneficial to CPF and R&M. But having said that, as we've consistently said, we do view the balance sheet as relatively well matched. So so you know, both in the rising rate environment and a falling rate environment, we don't see really large swings in our net interest margin and net interest margin tends to stay in a pretty pretty well defined range. Hopefully, that helps, Dave.

因此，總體而言，我們預期降息將對 CPF 和 R&M 有利。但話雖如此，正如我們一直所說的那樣，我們確實認為資產負債表相對匹配。所以你知道，無論是在利率上升的環境還是利率下降的環境下，我們的淨利差都沒有出現真正的大幅波動，而且淨利差往往保持在一個相當明確的範圍內。希望有幫助，戴夫。

Yes, that's terrific. And since we were just talking about deposits was once they've they're ours. I was hoping you could touch on maybe some of the deposit trends you're seeing in some of the drivers of the NIB. outflows, whether you started to see that reverse course at all? And just how do you think about deposit growth as we look forward some of the initiatives you've put in place. Have you started to see any benefits from your Japanese partnership for any inflows from insurance proceeds and the wildfires? Or just kind of curious, again, some of the drivers of the flows in the quarter and then kind of the outlook going forward and some of your initiatives.

是的，那太棒了。因為我們只是在談論存款，所以一旦存款，它們就是我們的了。我希望您能談談您在 NIB 的一些驅動因素中看到的一些存款趨勢。資本外流，您是否開始看到相反的方向？當我們期待您採取的一些措施時，您如何看待存款成長？您是否開始看到與日本的合作關係對保險收益和山火帶來的資金流入有任何好處？或者只是有點好奇，再次了解本季流量的一些驅動因素，然後是未來的前景和您的一些舉措。

Yes, I can start, David, David again on the again, core deposits as a whole were relatively flat sequential quarter, which is which is positive. There was some continued migration within core deposits out of DDA into interest-bearing on. However, Dayna Matsumoto did a good analysis. And if you've been tracking the third quarter, the average balances of DDA and early in 2023, the sequential quarter declines were about $80 million to $90 million a quarter out of DDA and then in the third quarter declined to $55 million and in the fourth quarter declined to $30 million. And these are our quarterly average balances so far, the trend is moving in the right direction. Our DDA represents about 28% of total deposits, which is where it was in late 2019 pre pandemic. So all indicators are pointing to the outflow of the migration of non-interest bearing are continuing to slow then, yes, we will need to turn the tide and it can grow growing again, and the teams are really focused on that.

是的，我可以開始，大衛，大衛再次強調，核心存款整體上環比持平，這是積極的。核心存款持續從 DDA 遷移至計息存款。不過，Dayna Matsumoto 分析得很好。如果您一直在追蹤第三季的 DDA 平均餘額以及 2023 年初，您會發現每季 DDA 的平均餘額下降了約 8,000 萬至 9,000 萬美元，然後在第三季下降至 5,500 萬美元，在第四季度下降至3000 萬美元。這些是迄今為止我們的季度平均餘額，趨勢正在朝著正確的方向發展。我們的 DDA 約佔總存款的 28%，這是 2019 年底大流行前的水平。因此，所有指標都表明無息遷移的流出正在繼續放緩，是的，我們需要扭轉局勢，它可以再次增長，團隊確實專注於這一點。

Got it. That's helpful. And then maybe a last one for me. Just touching on the capital priorities. You talked about a pause last quarter on the buyback, you've made several balance sheet moves, but those are capital neutral. I'm just curious maybe your appetite for additional securities restructurings or share repurchases we put in the new program this quarter. Just curious your thoughts on capital priorities given given the strength of your capital base.

知道了。這很有幫助。對我來說也許是最後一次。只是觸及資本優先事項。您談到上個季度暫停回購，您已經對資產負債表進行了幾次調整，但這些都是資本中立的。我只是好奇您對我們本季新計劃中的額外證券重組或股票回購的興趣。只是好奇考慮到您的資本基礎實力，您對資本優先事項的看法。

Yes, David, the capital on capital management is remains consistent. So we'll continue to do pay the quarterly cash dividend at similar similar payout payout levels. And then beyond that, we are we are open to all alternatives right now. We do have the other Board provide us another authorization on the share repurchase plan. And then like you said, there are still opportunities to do further balance sheet restructurings, and we'll be evaluating those options against each other and on with the buyback where the ultimate Insider. So we'll we'll we'll make the decisions that we book, we believe are prudent beyond the cash dividend.

是的，大衛，資本管理上的資本是保持一致的。因此，我們將繼續以類似的支付水準支付季度現金股利。除此之外，我們現在對所有替代方案都持開放態度。我們確實有其他董事會向我們提供了有關股票回購計劃的另一項授權。然後就像你說的，仍然有機會進行進一步的資產負債表重組，我們將相互評估這些選項，並在最終的內部人士的回購中進行評估。因此，我們將做出我們預定的決定，我們認為除了現金股利之外，這些決定都是謹慎的。

Okay, terrific. And just confirming that it sounds like the margin guidance you're talking about for a trough in the first half that does incorporate rate cuts.

好吧，太棒了。只是確認這聽起來像是您所說的上半年低谷的保證金指引，其中確實包含了降息。

Yes, that are our baseline forecasts. Our internal baseline forecast has 325 basis point cuts in 2024 on, but nothing in the first quarter. Again, I think that the important thing to note on the net interest margin is the arm interest rate swaps are forward-starting interest rate swap that we put in in early 2020. So on it goes live in on April one, April one of 2024. And again, we were paying six to 10 and were receiving Fed funds flowing. So at the current time with three 42 and 40 basis points in the money on $115 million on. So by our our forecast, if there if there are the three, 25 basis points cuts cuts in 2020 for the swap will add $1.8 million in net interest income, two basis points to NIM. $0.05 to EPS.

是的，這是我們的基準預測。我們的內部基準預測在 2024 年下調了 325 個基點，但第一季沒有下調。再次強調，我認為關於淨利差需要注意的重要一點是，手臂利率掉期是我們在 2020 年初投入的遠期利率掉期。因此，它將於 2024 年 4 月 1 日上線。再說一遍，我們支付了六到十美元，並收到了流動的聯準會資金。因此，目前 3 個 42 和 40 個基點的資金總額為 1.15 億美元。因此，根據我們的預測，如果存在 3 個基點，那麼 2020 年掉期利率將減少 25 個基點，淨利息收入將增加 180 萬美元，相當於淨利差 (NIM) 兩個基點。每股收益 0.05 美元。

Terrific. That's helpful. Thanks, everybody.

了不起。這很有幫助。謝謝大家。

(Operator Instructions) Andrew Liesch, Piper Sandler.

（操作說明）Andrew Liesch、Piper Sandler。

Thanks for joining everyone on. So just to touch base on the kind of the repositioning of the securities and the the $2 million and then the offices as well, $2 million, how much of that it's going to flow to the bottom line versus redeployed and reinvested back into the franchise.

感謝大家加入。因此，讓我們來談談證券和 200 萬美元的重新定位，以及 200 萬美元的辦公室的重新定位，其中有多少將流向利潤，而不是重新部署和再投資回特許經營權。

Andrew, that's a good question for David.

安德魯，這對大衛來說是個好問題。

Yet again, like like all banks, we continue to invest in the franchise. We as you know, Andrew, we've had multiple on technology initiatives on first, we started with customer facing technology enhancements. More recently, we've been focused on the back-office on with some software new software implementations so on. I think the way to answer your question is it is likely won't all flow to the bottom line. But what I would probably guide you to is on our quarterly run rate guidance on OE. ON. So we're still guiding to 40 to $41 million per quarter for full year 2024 guidance in the one $160 million and $164 million range. And then if you normalize 2023 for the nonrecurring, it ends up being like a low single digit annualized growth rate, which we believe is reasonable considering the other inflationary pressures that we're all dealing with. So on what I would say is we we we are finding some offsets. We will find some offsets for the to offset the full inflationary impact such that the annualized growth rate and expenses, it is in the low single digit range.

再次，像所有銀行一樣，我們繼續投資於特許經營權。如你所知，安德魯，我們首先採取了多項技術舉措，我們從面向客戶的技術增強開始。最近，我們一直專注於後台辦公室的一些軟體、新軟體的實施等。我認為回答你的問題的方法是它可能不會全部流向底線。但我可能會引導您了解我們關於 OE 的季度運作率指引。在。因此，我們仍將 2024 年全年指導價定為每季 4,000 至 4,100 萬美元，範圍為 1.6 億至 1.64 億美元。然後，如果將 2023 年的非經常性經濟正常化，最終的年化成長率將是低個位數，考慮到我們正在應對的其他通膨壓力，我們認為這是合理的。所以我想說的是我們正在尋找一些補償。我們將找到一些抵消措施來抵消全部通膨影響，使年化成長率和支出處於較低的個位數範圍內。

Got it. That's helpful from a good way to think about it. The I've noticed that the reserve ratio has been grinding higher the last few quarters. I guess what are some of the drivers of the CECL model that's causing that to happen because outside of the some of the losses in the mainland consumer book, the credit performance has been excellent. So I'm just curious like what's driving in the CECL model that the reserve ratio a bit higher?.

知道了。從好的角度來看，這很有幫助。我注意到過去幾季準備金率一直在上升。我猜想CECL模型的一些驅動因素導致了這種情況的發生，因為除了大陸消費者帳戶的一些損失之外，信用表現一直非常出色。所以我只是好奇是什麼推動了 CECL 模式的準備率略高？

Yes, Andrew, the so like like our CECL models, there is out there is a baseline economic forecast. We use the Moody's. So we subscribe to Moody's for our economic forecast. And on then Then there's the qualitative factor is the qualitative overlay on top of that on. I think I think the grinding higher unit increased one basis point on. And yes, I think it was primarily related to on the mainland consumer charge-offs. So mainly consumer has been in the one area that we've seen a little bit of a credit deterioration, although I would say that the deterioration is from a have normally pristine period of time where all consumers were buoyed by the fiscal stimulus. So it feels like it's rising a lot, but it's really only normalizing back to probably it's our normal expectation.

是的，安德魯，就像我們的 CECL 模型一樣，有一個基準經濟預測。我們使用穆迪。因此，我們訂閱穆迪的經濟預測。然後是定性因素，是在此之上的定性疊加。我想我認為磨高單位增加了一個基點。是的，我認為這主要與大陸消費者的沖銷有關。因此，主要是消費者所在的領域，我們已經看到了一點點信用惡化，儘管我想說這種惡化是從通常原始時期開始的，當時所有消費者都受到財政刺激的提振。所以感覺它上升了很多，但實際上只是正常化回可能是我們的正常預期。

I'm not sure that does that address your question, Andrew, as And absolutely, Bob.

我不確定這是否能解決你的問題，安德魯，當然，鮑勃。

And then you alluded to it earlier that the high level of cash balances at quarter end or year end. What are you thinking about those?

然後您之前提到季度末或年末的現金餘額很高。你在想那些？

Those will be redeployed somewhere there's some more deposit declines in certain areas that content that can be used to fund. Just how should we think about the cash going forward?

這些資金將重新部署到某些存款下降較多的地方，而這些內容可用於資助。我們該如何看待未來的現金？

Yes, there was there was additional cash build on during the fourth quarter, and I forgot to mention. So we had four basis points of sequential quarter net deterioration in the fourth quarter, two basis points of that was a result of the increase in on-balance sheet liquidity. And so going forward, the plan is to not increase on-balance sheet liquidity further, I think I think we've done enough there that the fortress balance sheet is good for trust and offer so on, we probably won't grow it any further. And we are looking at options to reduce on-balance sheet liquidity somewhat.

是的，第四季有額外的現金積累，我忘了提及。因此，第四季我們有四個基點的連續季度淨惡化，其中兩個基點是由於表內流動性增加的結果。因此，展望未來，計劃是不再進一步增加資產負債表內的流動性，我認為我們已經做得足夠了，堡壘資產負債表有利於信任和提供等等，我們可能不會增加任何流動性更遠。我們正在考慮在一定程度上減少資產負債表內流動性的選擇。

Got it. So right now, maybe just hold it in Fed funds and earn that and before under their option for?

知道了。那麼現在，也許只是將其持有在聯邦基金中並根據他們的選擇賺取先前的收益？

Obviously, Fed funds yield of five 50 or close to five 15. That's not a not a bad yield in currently. The challenge is it's not going to stay there, right? So that's where we're redeploying some of the on-balance sheet, liquidity could make sense.

顯然，聯邦基金收益率為五比五或接近五比一十五。目前來說，這並不是一個不錯的收益率。挑戰是它不會留在那裡，對嗎？因此，這就是我們重新部署資產負債表上的一些流動性的地方，流動性可能是有意義的。

Got it. And that covers all my questions. Thanks off the bat.

知道了。這涵蓋了我所有的問題。立即感謝。

Thanks, Andrew.

謝謝，安德魯。

Thank you, Andrew.

謝謝你，安德魯。

(Operator Instructions) And it looks like we have no further questions. So at this time, I will turn the call back over to Arnaud Martinez for closing remarks. Arnaud, the floor is yours.

（操作員說明）看來我們沒有其他問題了。因此，此時，我將把電話轉回給阿諾·馬丁內斯（Arnaud Martinez）進行總結發言。阿諾德，地板是你的。

Thank you, Greg, and thank you very much for participating in our earnings call for the fourth quarter of 2023. We look forward to future opportunities to update you on our progress. Thanks very much.

謝謝 Greg，非常感謝您參加我們 2023 年第四季的財報電話會議。我們期待未來有機會向您通報我們的最新進展。非常感謝。

Thank you, Arnold. And ladies and gentlemen, that does conclude today's call. Thank you all for joining and you may now disconnect.

謝謝你，阿諾德。女士們、先生們，今天的電話會議到此結束。感謝大家的加入，現在可以斷開連線了。