Bank of Hawaii Corporation (BOH) Q2 2018 Earnings Report, Transcript and Summary

Good day ladies and gentlemen. Welcome to the Bank of Hawaii Corporation Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and our instructions will follow at that time. [Operator Instructions] I would like to [Indiscernible] this conference call Ms. Cindy Wyrick. You may begin, ma'am.

Thank you, Kevin. Good morning, good afternoon everyone. Thank you for joining us today. Also with me this morning is our Chairman, President and CEO, Peter Ho; our Chief Financial Officer, Dean Shigemura; and our Chief Risk Officer, Mary Sellers. Before we get started, let me remind you 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. And now I'd like to turn the call over to Peter Ho.

Thanks Cindy. Good morning everyone and thanks for joining us today. We're pleased with our overall financial results for the second quarter of 2018. We had good financial performance, our asset quality remained solid, and our liquidity and capital levels remained quite strong. Loans grew to $10.1 billion at the end of the quarter, up 1.4% from the previous quarter with growth in both commercial and consumer loans. Compared with the second quarter last year, total loans increased 7.1%. Our decision to reduce public time deposits offset growth in both our consumer and commercial deposit books this quarter resulting in a small decline overall for the first quarter -- or from the first quarter. Compared with the end of the second quarter last year, total deposits were up 1.1%. Now, let me turn the call over to Dean to provide with more financial detail and then after Dean, Mary will give you some comments on asset quality. Dean?

Thank you, Peter. Net income for the second quarter of 2018 was $54.7 million or $1.30 per share compared to $54 million or $1.28 per share in the first quarter and $44.7 million or $1.05 per share in the second quarter last year. Our return on assets during the second quarter was 1.30%, the return on equity was 17.68% and our efficiency ratio was 56.12%. Our net interest margin in the second quarter was 3.04%, up four basis points from the first quarter and up 12 basis points from the same quarter last year. Net interest income on a reported basis for the second quarter of 2018 was $120.5 million, up $1.5 million from the first quarter and up $8.2 million from the second quarter last year. As Mary will discuss later, we recorded a credit provision of $3.5 million this quarter. Non-interest income totaled $41.3 million in the second quarter of 2018 compared with $44 million in the previous quarter and $45.2 million in the same quarter last year. Non-interest income during the second quarter of 2018 included a negative adjustment of $1 million related to a change in the Visa Class B conversion ratio. Non-interest income in the first quarter of 2018 included $2.8 million resulting from a low-income housing investment sale and distribution. There were no significant items in non-interest income during the second quarter of 2017. Adjusted for the charge, the decrease in non-interest income compared with the previous year was largely due to lower mortgage banking income and a decline in service charges. We expect non-interest income to be approximately $42 million per quarter over the second half of the year. Non-interest expense totaled $90.8 million in the second quarter of 2018 compared with $94.4 million in the previous quarter and $88.2 million in the same quarter last year. Although there were no significant items in non-interest expense during the second quarter of 2018, the results included approximately $500,000 for the minimum wage increase to $15 an hour and $200,000 increased to our value share as a result of the reduction in the federal tax rate as well as annual merit increases. As a reminder, non-interest expense in the first quarter of 2018 included seasonal payroll-related expenses of $2.5 million, a legal reserve of $2 million, and severance of $1 million. For the full year of 2018, we expect expenses to be about 2.5% to 3.5% above our 2017 expenses. The effective tax rate for the second quarter of 2018 was 18.94% compared with 16.19% in the previous quarter and 31.37% during the same quarter last year. The lower effective tax rate in the first quarter of 2018 was due to a $2 million favorable adjustment to our low-income housing investments. Currently, we expect the effective tax rate for the remainder of 2018 to be between 19% and 21%. As a result of loan growth during the second quarter, our investment portfolio decreased to $5.7 billion. Premium amortization was $9.3 million in the second quarter of 2018, down from $9.6 million in the previous quarter and $10.4 million in the same quarter last year. We purchased a total of $82.5 million of securities during the quarter, which were primarily comprised of treasuries and SBA securities. The reinvestment differential during the second quarter was a positive 14 basis points. The duration of the available-for-sale portfolio was 2.44 years at the end of the second quarter of 2018, the held-to-maturity portfolio duration was 4.21 years, and the duration of the total portfolio was 3.55 years. For the remainder of 2018, we expect our loan growth to remain in the mid to upper single-digits. Deposit growth is expected to remain fairly flat as growth in our consumer and commercial deposits may be offset by planned runoff and public time deposits. Our shareholders' equity increased to $1.25 billion at the end of the second quarter, our Tier 1 capital ratio was 13.27%, and our Tier 1 leverage ratio was 7.53%. During the second quarter, we paid out $24.7 million or 46% of net income and dividends and repurchased 292,000 shares of common stock for a total cost of $24.8 million. We repurchased an additional 68,000 shares between July 2nd and July 20th at a total cost of $5.7 million. And finally, our Board declared a $0.60 dividend for the third quarter of 2018. Now, I'll turn the call over to Mary Sellers.

Thank you, Dean. Net charge-offs for the second quarter totaled $3.3 million or 0.13% annualized of total average loans and leases outstanding. Comparatively, in the first quarter of 2018, we recorded net charge-offs of $3.5 million or 0.15% annualized, while in the second quarter of 2017, net charge-offs were $3 million or 0.13% annualized. Non-performing assets were $15.2 million or 15 basis points at the end of the second quarter, down $600,000 for the linked period, and down $1.2 million year-over-year. Loans past due 90 days or more and still accruing interest for $13.3 million at the end of the second quarter compared with $8.2 million at the end of the first quarter of 2018 and $7 million at the end of the second quarter of 2017. Restructured loans not included in non-accrual loans or loans past due 90 days or more were $50.2 million at the end of the quarter down $6.5 million for the linked period and down $3 million year-over-year. Residential mortgage loans modified to assist our customers accounted for $18.9 million of the total at the end of the second quarter. At the end of the quarter, the allowance for loan and lease losses totaled $108.2 million which given net charge-offs of $3.3 million required a credit provision of $3.5 million. The ratio of the allowance to total loans and leases was 1.08%, down one basis point from the previous period and five basis points from the second quarter of last year. The allowance reflects the continued strength in company's asset quality and the Hawaii economy over this period as well as the mix in quality and loan growth. The total reserve for unfunded commitments was $6.8 million at the end of the quarter, unchanged from the second quarter of 2018 and June 30th, 2017. We continue to maintain our disciplined approach to lending, remaining focused on our Hawaii and West Pacific markets as we see leverage levels and credit structures continuing to ease. And based upon our experience from the Great Recession, we've strategically adjusted our loan mix over the past several years, exiting those markets and products with greater volatility while calibrating loan underwriting to optimize performance. Accordingly, we're well-positioned to continue to serve our customers as we move through the next several years. I'll now turn the call back to Peter.

Thanks Mary. The Hawaii economy continues to perform well due to healthy construction pipeline in both the public and private sectors, continued strong performance in Hawaii's tourism industry, and rising real estate prices. Statewide unemployment in June was 2.1%. It remains quite low compared to the national level. Our visitors continues to grow from record levels of last year. For the first five months of 2018, total visitor spending increased 10.9% and visitor arrivals increased 8.4% compared with the same period in 2017. Year-to-date through May, all four of Hawaii's largest visitor markets, the U.S. West, the U.S. East, Japan, and Canada reported strong growth compared to the first five months of last year. Real estate also continues to remain strong during the first half of 2018. The median sales price of a single-family home on Oahu, our primary market, increased 3.9% during the first six months of 2018, and median price for condominium increased 6.5% compared with the same period last year. Inventories remained tight. Months of inventory at the end of the quarter was 2.7 months for a single-family home and three months for a condominium. Median days on market during the first half of 2018 was 16 days for a single-family home and 18 days for a condominium. Thanks again for joining us today and now we'd be happy to respond to your questions.

[Operator Instructions] Our first question comes from Ken Zerbe with Morgan Stanley.

Okay thanks. I guess just really big picture in terms of the volcano; obviously you didn't mention it. I don't think you have a lot of exposure. But can you just address do you have an exposure of the Big Island that may or may not be affected by the volcano? Thanks.

We do. You're right, Ken. It's a small amount. Mary, why don't you give us a scope of that?

Sure. We have four mortgage loans that total $556,000. Actually two of those loans have been destroyed and we're awaiting proceeds from the insurance claims which have been filed. So, at the end of that, we'll have about $57,000 in exposure. We have eight home equity loans, a total of $496,000 in exposure; four of those also were destroyed. We're waiting for insurance proceeds. Claims have been filed. At the end of that, we'll have $61,000 in exposure. So, the total will be about $118,000.

Got you. And do you -- the one thing you're talking about that were destroyed, are you fully covered by insurance such that there was zero credit loss in the quarter related to those? Or is that yet to come after insurance?

No credit loss this quarter but -- and no credit loss after the insurance proceeds.

Got you. Okay. Perfect. And then just in terms of the public funds, if I heard you right, it sounded like you were expecting the public fund or the public time deposits to continue to roll-off or decline. Could you just elaborate on that? Like what's driving that? Where are they going, et cetera? Thanks.

Yes. Sure Ken. The -- so the public time -- our public book overall is $1.7 billion in deposits. So, it's -- the smallest segment that we have is 9% of our overall deposit base. The public time at this point is down to $689 million. And really for the better part of this year, we've been bringing that portfolio down for the simple reason that the pricing in that particular segment has been pretty darn high. And given our loan-to-deposit ratio and given our liquidity needs, we just don't have a need to be spending that kind of money rate-wise. And so as a result, we've been allowing that to flow -- to come down.

Okay. Thank you very much.

Yes.

Our next question comes from Aaron Deer with Sandler O'Neill and Partners.

Hi, good morning guys.

Hey Aaron.

I guess kind of following up on that from a balance sheet perspective, the average earning assets have been drifting little lower. As you think about kind of that earning asset mix, obviously, it's been improving as it shifts towards loans. But do you have an idea in terms of target in mind versus what you want to see happen with the earning asset growth over the next few quarters given kind of what you're seeing for funding -- lending opportunities and funding costs?

Yes. Aaron, so I guess from a lending standpoint, we don't feel constrained at all from our deposit base. So, let's begin with that. We're running 66.7% total loan-to-deposit ratio through the quarter. The over -- I mean earning assets are really going to be driven by deposit levels. We think that there's an opportunity even in this higher rate environment to grow overall deposits. We're seeing nice growth actually in both our consumer and commercial segment. Those are up 3% year-on-year. Again, as Ken alluded to, the real challenge is in that public space and in particular, in that public time deposit space. So, we got $689 million left in public time. I would not be surprised to see that number halve and that's going to eat into overall deposit growth and therefore, overall earning asset levels. So, I guess the guidance that I might share is we see ultimately kind of lower single-digit deposit growth opportunity. But in the short-term, that's going to be impaired a bit as we work through these public time deposits which we're getting close or beyond 2% yields on less than one year money. So, it's just too rich for our bailiwick at this point.

So, I guess you should be getting a better earning asset mix than as you kind of bleed off some of these, call it, excess liquidity which should strengthen the margin. But if earning assets are coming down, I guess where would you see overall net interest income? I would expect that it's still heading higher directionally, but can we continue to see, call it, a couple of million dollars increase each quarter? What are your thoughts on that front?

Yes. I don't believe that the -- earning assets is going to be going down. It's probably going to be flattish is the way I would describe it going forward and that's mainly due to, again, the deposit levels. But in terms of net interest income, yes, I would expect some modest increases to continue in that.

Okay. And then just quickly on the Visa B. The value adjustment there this quarter was around $1 million. Is that -- should we expect that to continue to run around that level or might it drift back down to where it had been in the prior quarters?

Yes. Aaron, that amount -- that money was used to basically reconcile where we ended up with the -- on the primary lawsuit that Visa has -- is about to just settle actually. So, that's a one time. What that will do is reclassify our Visa stock from Class B to Class A. That will -- that's a good thing. That will allow us to freely trade that stock. And the longer term benefit to that also is that there are some associated expenses today with carrying that Visa stock as Class B that should improve our expense profile by a couple of million dollars annually as well. That last piece, I wouldn't anticipate seeing though until the stock actually converts from B to A, which we see kind of down to the end of the year or maybe early next year.

Okay. And then at that point, it would just be kind of valuation marks on the A or if you take gains or losses on it, I would guess, through sales?

Exactly.

Okay, great. Thanks very much. I appreciate taking my questions.

Yes. Sure.

Our next question comes from Brett Rabatin with Piper Jaffray.

Hi, good morning everyone.

Hey Brett.

Wanted to first just ask about the loan growth guidance and just thinking about the kind of mid to upper single-digit. I noticed that C&I was a little lower linked quarter and I don't know if there was payoffs in that portfolio. But I was hoping if you could maybe just talk about that. And then is the outlook were predicated on some expected level of payoffs on either commercial real estate or C&I, what kind of drives you to that mid to high single-digit outlook going forward?

Yes. So, yes, the 1.4% growth on a linked basis this quarter is about what we'd be looking to Brett. The -- as you pointed out, the C&I was a bit weaker this year. It was down $46 million on a linked basis. We attribute about $27 million of that to payoffs. So, those were loans that was in a competitive situation. It was simply that we chose not to re-up in that -- in those loan facilities, frankly, for structural purposes. So, I actually hate to talk about loan movements coming about as a result of payoffs or fundings because that's, frankly, the nature of the business. But that's exactly what happened in C&I this quarter. I'd like to think that we will have a little more stability in that book moving forward, so call that flat. Construction is probably going to continue to perform as it has the past couple of quarters, which is to say it's going to [Indiscernible] down a little bit from its base of $185 million at quarter end. CRE, we think we still have some opportunity there. And then leasing, as you know, is largely a portfolio that we're winding down. The consumer segments continue to do pretty well. Home equity, indirect, other consumer had nice growth in the quarter. We anticipate to continue to see that moving forward. Residential mortgage was off, has been off as it has been for the entire industry. We're probably right on par there but down a bit, but still seeing growth in resi mortgage, up 1.2% for the quarter. So, all in all, I think it was an okay quarter for us loan growth-wise and probably representative of what we're looking at moving forward over the next several quarters.

Okay. And with all the commentary around managing the funding cost and the balance sheet, it would seem like your margin could continue to move up a few basis points depending on the magnitude of the mix shift change. Is that fair or are there other dynamics that might impact it?

That's the game plan.

Okay. Great. Appreciate the color.

Our next question comes from Jackie Bohlen with KBW.

Hi, good morning everyone.

Good morning Jackie.

Mary, I know we're a little bit early in the game on this one, but I wondered if you might be able to provide any color about what you're doing to prepare for CECL and just any color that you can provide at this point in time.

Sure. Well, we have a working group that is comprised of -- with representatives of -- representatives across the company and we had developed a plan last year that was fairly detailed. At this point, we've done all the data validation. We've done what we think would be an appropriate approach. We've hired an external consultant to help us work through that and validate that and they're also helping us explore other approaches. We feel pretty good based on feedback we've gotten from our external accountants as well as the consultant. So, I think we're in good position to move forward and be in a good position to implement well in time.

Okay. And I would guess that over the next several quarters, we'll probably get a little bit more information as you continue with your process.

Yes.

Yes. And Jackie I would add that, obviously, it's a new process, it's a new process for everyone. So, where we end up is still a bit in the air as it is for the industry. But as we look at our portfolio dynamics as they stand today, an awful lot of work went into or has gone into analyzing what were some of the higher loss categories through the Great Recession, which is coming up on a decade ago now. And we really have cut back a lot of exposure, which, just through a dent of historical loss rate, has proved to be not as durable through a downturn. And in fact, as we look at our monitored and FICO scores, certainly on our consumer side, what we see is a real improvement in credit quality from 2017 versus, call it, 2007 pre-crisis. So, we don't know what the ultimate CECL amount is going to be. It's a little premature for that. But I would say that I feel pretty darn good about the overall quality of the portfolio.

Okay, that's excellent color. Thank you, Peter. And just one last quick one for me. The comment that -- I think it was you that made it, but it might have been someone else, regarding the additional savings that you would get from the conversion of the Visa B shares into A, I would assume that that's not included in your expense growth that you discussed earlier, the potential for that?

In the expense growth?

Yes. The 2.5% to 3.5%, that doesn't take any -- the potential reduction into consideration, right?

It's a contra-revenue item.

Okay. Never mind then. Okay. Thank you.

Okay.

Our next question comes from Ebrahim Poonawala with BOA.

Good morning guys.

Good morning.

Just -- Peter I wanted to follow-up with the -- on the $689 million you mentioned in deposits, could go down as much as 50%, is that based on the maturities coming up likely to happen all in 2018?

No, it's not really based on maturities, Ebrahim. It's really based on what we're seeing in the marketplace and where we're landing in terms of picking up what we would consider to be higher-quality funding. We're kind of shooting 50-50 right now in that particular market. And so I just extrapolated that forward and figured that over a period of time, the $689 million could fall by as much as half.

And you did also say that ex that, you would expect deposit growth to be low single-digits, is that right?

Actually, I think what I meant to say at least was that we're seeing low single-digit in consumer and commercial, which are our larger segments. And then once we're through kind of this bleeding in the public time deposit space, that's kind of what I would anticipate to be our growth rate moving forward.

Understood. And just in terms of the consumer and commercial, you talked about like a rate competition a little bit there. Like are we seeing local competitors getting more aggressive or is that something where you expect the back half to more likely look like the first half of this year despite where we are in terms of the absolute fed funds rate?

Yes. In terms of the competitiveness of the deposit segments, clearly, public time or public in general is most competitive. There we actually -- I think that there may actually be a fair amount of national brokerage competitors in that space as well. The consumer book is probably the most disciplined segment that we see right now and I think that reflects in the fact that we've generated 5.4% deposit growth year-on-year in consumer. Commercial is kind of in between. So, I think we still have good discipline at least in the markets we're serving on the commercial front. And that's up; call it, 0.3% on a year-on-year basis. So, the competitive landscape really depends on the deposit market that you're looking at. And for the most part, our core consumer and commercial markets, which are 91% of our overall deposit base, I think, are holding in pretty well.

Understood. And just a follow-up on the margin and rate sensitivity question. I guess, Dean, if we think about -- if the earning asset mix is moving towards loans and you're getting rid of the higher cost deposits, the four basis points of expansion we saw this quarter, can you frame -- like frame that for us, what we should expect in terms of margin expansion over the next couple of quarters and what every incremental rate hike means for the margin in addition to that?

Yes, we -- at this point, we are expecting very modest increases in the margin. The -- every rate increase does help us on the net interest income and margin side. So, going forward, I believe that if we can get a steepening in the curve coupled with a raise in the fed funds rate, that's where we're going to get much more material increases, both in the margin as well as net interest income.

Got it. But is what we saw in 2Q repeatable in terms of three to four basis points of margin expansion without steepening in the curve or is that too much?

It will be around that range, I would say. Yes.

Got it. And if I can sneak in one last, Peter. It just seems like -- you mentioned tourism is strong, but it feels like when you look at loan growth, commercial's kind of slowing down. And I'm wondering if you think, as we go into 2019, things are just losing steam a little bit in terms of given where we are in sort of the economic recovery. And like do you expect 2019 to look slower than 2018? Or are you seeing signs where things are kind of getting to a stage in the cycle where things start tapering off into next year?

Well, I think it's -- frankly, I think it's a little of a couple of factors, Ebrahim. I think on the one hand, mathematics plays into this a bit, right? So, what had been a very constructive part of the commercial loan growth story had the construction lending. And so that topped up kind of $250 million-ish, call it, and that's now sliding back. We're at $185 million in the second quarter and we'd anticipate that level to be flat to down a bit as we move forward here. I think -- as I mentioned earlier, there's still a fair amount of activity in the commercial mortgage space. So, we think that there's expansion opportunity remaining there. The C&I book is -- our view is that that's going to be stable at best. I think that structures are getting more aggressive in the marketplace, and we're frankly probably feeling we're deeper in the credit cycle than shallower. So, we're probably going to get a little bit more conservative as we move forward. So, I think that's going to be a bit of a headwind for us. So, I think that the economy is maybe flattening a bit but at a high level, but I wouldn't to say that 2019 really represents any meaningful reduction off of what we've experienced economically speaking. But I would say, on the other hand, that I think from a credit cycle standpoint, lending cycle standpoint, we are getting deeper and we likely will begin to structure a little bit tighter, which could impair our ability to grow, in particular, in the C&I space moving forward.

Understood. Thanks for taking my questions.

Our next question comes from Laurie Hunsicker with Compass Point.

Yes, hi. Good morning.

Hey Laurie.

Wondered if we could just go back to deposits. Dean, I just wanted to verify something you said. So, if we look at your public time deposits, that $689 million that was costing 2% in the quarter? Did I hear you right?

The current rates that are in the market are at over 2%. That's what we stated.

That's not what that book is costing us. That's what the market's bearing right now.

Got it. Okay. And do you have a cost of those deposits or is that not something you disclose?

We've not disclosed that in the past.

Okay. And then just wondered if you could give us some commentary around. Both your now and your savings were up in the quarter. How should we be thinking about those line items going forward? Your now is up six basis points. I'm just talking about the cost and your savings were up seven. How should we be thinking about that?

I think that we're going to -- as funds creeps up, we'll continue to see deposit pricing moving up as well on our book, probably faster down the commercial front than the consumer front. But for the most part, Laurie, I'd say we've been pretty satisfied with the betas that we're generating on the consumer and commercial fronts. So, higher, but I think, probably, I think the lag is going to be appropriate. We would hope at least.

Okay. And then just as I look at your core deposits, so stripping out all CDs, it's held pretty constant the last few quarters. Your core deposits have been $13.0 billion. How do you see that growth occurring or how should we be thinking about that growth?

Well, it's become an emphasis of the organization. So, I think -- and I think maybe this is true of the industry. When rates were zero, it wasn't as difficult to generate funding and deposits. And what's happened is, as rates move up, obviously, there's more competition. It's tougher to get those deposits. So, we need to put more effort into it, number one. And number two, you find out what represents a quality deposit holding and what doesn't, right? And when rates are zero, they all kind of look like they're high quality. But you find out, in a higher rate environment that we're in right now, exactly where your hot pockets are, if you will. And I think we've identified that. We're deploying strategies to retain quality relationship deposits throughout the marketplace.

Okay. Okay. And then just last question. Can you just share with us -- and this is kind of along the lines of what Ken was asking with respect to your volcano exposure, can you just share with us what your total loan exposure on the Big Island is and then maybe what your total loan exposure just in the Puna district is? And any thoughts you potentially have around how you're approaching loan loss provisioning as we go forward just with respect to that piece? Thanks.

Sure. Well, total exposure on the Big Island is $719 million. It's 7% of our portfolio. If we look at Pahoa, which we've talked about the inundation zone, it's about -- and we've talked about that. But if we look broader at Pahoa and Puna, it's about $13.1 million. Right now, we're really not seeing any degradation within our asset quality metrics across the island. In fact, we're seeing improvement across key measurements. So, it seems to be pretty isolated to just that one area. So, at this point, there doesn't seem to be a material impact. Of course, we'd be monitoring, but right now, we're not really seeing the need to build a reserve around that.

Yes. And I mean, the concept of the Big Island risk exposure really isn't relevant to the volcano discussion. Pahoa isn't really either. But just to give you some scale for what the magnitude is, even if we took Pahoa, which is a degree larger than what the potential exposure is it's down to, what, $13 million, you said?

Yes.

Yes. But the real issue is around lava zone one and two areas, and that's a pretty contained number.

That's helpful. Thank you.

Yes.

Our next question comes from Jeff Rulis with D. A. Davidson.

Good morning.

Hey Jeff.

Peter, if you could just tell us about the, sort of the early returns or how the products received as the relaunch of your money market product -- as you've kind of brought that back under the -- I think you had that parked elsewhere.

Yes. So, it's actually very, very early. So, I guess the only thing that I can share with you at this point is that we're getting broad acceptance from our existing customers that are in our current money market offering, which is not a Bank of Hawaii product. So, that transition is happening and we really haven't run into any issues there at all. And strategically, we think that as the short-end rates continue to climb, that potentially, that becomes a nice earning fee stream for us. But probably a little bit early to talk about the success or lack thereof of the product at this point, except to say that for the existing clients we have, they're fine to step into that product.

If I were to ask about another sort of early product, the online mortgage application process, anything to add on that front?

No, not launched yet, but that project continues to go well. The reality is, Jeff, we're obviously behind nationally in that distribution capability and frankly behind locally as well. So, we'll be very happy to have that capability, which, frankly, I'd say, I'm a little embarrassed to say we're just not there yet though.

Got it, okay. And maybe one last one, kind of granular on the credit side, maybe for Mary. Just accruing past due 90 days, again pretty benign credit, clearly, but anything to speak of that rose that? And was there anything subsequent to quarter end that altered that balance?

Yes. We had a $5.6 million commercial mortgage. We did a four-month temporary change in terms. The partners were traveling in Europe. We booked the documentation immediately after June 30th. So, that's been resolved.

Got it. Okay. Thank you.

Okay.

And I'm not showing any further questions at this time.

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

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.