Hawaiian Electric Industries (HE) 5 May 202020 Q1 Earnings call transcript

Good day, and welcome to the First Quarter 2020 Hawaiian Electric Industries, Inc. Earnings Conference call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Julie Smolinski, Director of Investor Relations and Strategic Planning. Please go ahead.

thank for and us Brandon, you, you joining everyone today. Thank the delay for there. Apologies with Thanks for us. being

of Today, Hawaiian call. is course earnings quarter conference XXXX Electric Industries first

me Bank, Seu, of Hawaiian and President and other HEI Executive Joining members Wacker, senior President CEO Electric, Connie American as Rich Hazelton, as Savings Vice Scott Greg and HEI President CFO; and CEO; are today President management. CEO; Lau, well

locations social our practices, executives today. distancing different In keeping with are our in

we have during if delays please or quality us So, bear audio any the mixed with call.

performance. measures During today’s non-GAAP use call, we’ll to financial describe our operating

Our in comparable of of section press measures. presentation release contain measures these and are GAAP the Investor reconciliations and website posted Relations the to our

results in Forward-looking can website. from be statements today’s on presentation, SEC our call. will on differ actual be to expectations made found cause filings our Factors and with our the materially could that

And now, with remarks. Connie will Lau her begin

thank aloha, you, us Mahalo, Julie. today. And you Thank for joining everyone.

We hope you are well. safe and

with been are who thoughts have COVID-XX. affected those Our by

We’re weather grateful supplies we healthcare as others many services and lines, the collectively the and front pandemic. on providing for this workers the

quarter before Today, Greg how questions. economy review and positioned. our are Hawaii, with Then, impacts we guidance results turn first for to and reopening companies our discuss COVID-XX I’ll plans start our will in your

even personal their throughout and to our Through our as homes focus. well keeps employees flowing is an hospitals, money we for risk these COVID-XX, to our customers play. employees proud been to Hawaii them economy. our bank, our our the challenging these families. electricity essential of of services provide Continuing continuing companies has keep dedication and we unprecedented I’m vital provide while health these of and the as thank core themselves essential a services with from protecting times, our utility, and we’re challenge running. the ensure provide facing businesses our especially mindful through And help roles of to essential reliable through

that previously culture In Hawaii, together public our culture land managing a us and And terms has described we’ve of to special and that we of take to a our well other coming others. each of of health impacts talk Aloha environment. in and about our the of it’s COVID-XX. served kuleana, culture in care responsibility It’s of community the

Our travelers, government’s early both to work-from-home in residential all orders XX-day in like, the curve for actions and incoming succeeded impose and mandatory of whole stay-at-home, visitors Hawaii. statewide a response quarantines have flattening community and

caseload XX had Oahu, to density like our populous As comparable where San we’ve of we reopening days total days XXX, even but deaths cities new On were the enabled our a in no Xth, us May where also of have new and of digits. Jose, start island cases had cases. most is to sadly and multiple XX encouraging have population These California, economy. single are numbers of

a While through is we difficult time, will this we this get crisis. believe

that wanted we attractive major continue crisis, remain Hawaii tourism will to Post-XXX -- continue the and importance by state here. the Hawaii’s earth. state to visitors, will on strategic that for industry In Recession, Aloha significantly tourism. of change. the will people demonstrate they a a and still also travel We that very play to will government Hawaii believe state remain was Although for role has impacted a to Hawaii’s and and local to and the welcoming the of Great have of our to post as the strongly. opportunity and safe but continue for destination. this military, a came federal, clear we orders rebrand wanted back will tourism place safe our and be quarantine, be the to safest can place travel place that It people stay-at-home not beauty the Hawaii travel, been

market housing stable and continues Great after during robust and to relatively Recession was be supply. a the resilient. proven demand also Our for It limited has characterized by

here economy and also private collaborating to for to sectors the The we and future. like our public visitors, residents our reopen responsibly both, what want look in are to and economy shape

involved Our efforts. Company’s leaders are deeply in these

in X, In even navigate and of addition, months job fashion. has appointed coordinate a just stepped of phase plan our COVID number The three with former the community growth. Alan couple Phase CEO cases; state’s economy; our to and phases. of X, stabilization who our resilient X, our Oshima, economy Hawaiian more economic of Ige overarching and a reopening by of was recovery phase down making Governor and gradual business and Electric, ago, a recovery collaborative strong

Xst. beginning to to weeks increase May coming reopen activity have residents anticipate the and were mid have will resumed, local gradually months, We our resuming and providers activity late golf service welcome with and among Parks automated We’re recovery low-contact and to economic economy such visitors. preparing reopened, later courses surgeries elective over to year-end. by car and reopen as meaningful summer dealerships and allowed significant businesses

XX% return of their Economic normal forecast and June, Organization by arrivals that to XX% XX% year-end. with take longer, Research July, Yesterday, updated believe Hawaii reaching late by they will for local economic to will their beginning And half activity recovery. return and year-end in likely levels. University Hawaii’s our economic Tourism by May of

towards doing economy. opportunity thereto, consider ensuring and sustainable future This we And choices of a investments unique and the more to reopening that move our looking the gives at we’re state it economy. responsibly, our us a make

good right environment, a our our our lands, the communities. for for about our sustainable that is economy, ensures visitors tourism and and thinking experience level We’re of

advance neutrality remain we’re mind. to state’s to to energy to carbon our portfolio rebuild and state’s committed our on we economy goals. utility, XXX% with job goals our support we green with And focused expand recovery. clean opportunities. a progress, in economy the company renewable and continue working stakeholders projects our we’re diversify opportunities identify As standard to and Hawaii’s At in bank, to partner innovation building At

through Protecting To who the those to our able, our goals we health time physical and our and policy and protect been employees the work-from-home employees, who a and employees supporting of power must companies. this community have be teams operators. linemen employees and our as for we distancing our core safety implemented instituted customers, the of increase helping for mandatory such work use for discrete are on plant job, customers

increases branches should costs help over bank scaled and implemented back routine reducing remain transactions distancing for encouraging open for physical The mobile strong extensive usage, also online account keep those and open. We our precautions enrollments seen time. is and cleaning in which has bank that and

with As practices out stay-at-home into to safety. we will health and over state likely maintain orders county the and back operations, get albeit phase full phased new time,

this that support pleased enabled liquidity in our have customers balance us enterprise time. been We’ve sheet and strength our consolidated to our and of bank uncertain utility,

through reach Our June out, arrangements. we suspended for disconnections and so of utilities with have experiencing can the payment hardship nonpayment end help to urge customers

also very-focused of bills. affordability We on customer remain

are requests. more impact the even pending We and mindful it of economy need to rate how the efficiently, operate may given

largely customers. fuel One has our a which for item are costs, bright been pass-through spot

when they are benefits seeing prices, need it fuel some customers most. lower Our just of

kilowatt would bill For Oahu lower per example, month hour fuel XXX a than more costs May, reduce to by $XX on in March. compared

volatility But to customers term, longer its impact oil the continue customers. to for prices months. fuel next concerned few lower benefit the about we remain and of on expect We

focused we’re still rapidly as possible. moving So, on oil as off

small to a At our help Protection the under we working or bills teammates PPP to made bank, Program with shift and round-the-clock essential employees huge businesses Paycheck push other loans utilities. secure like pay

over of $XXX individuals. the obtain payrolls and secured American businesses, total placing fees. is in in our for And in Hawaii helping Hawaii top proud round, roughly forbearance also employing by million state’s nation. Americans funding small a and X,XXX states banks We’re that providing of approximately waiving XX% then, the options in eligible loan for five first customers deferral the XX,XXX number

Like as basis, well and strong comprised weather our remain of company, in COVID-XX. essential industries. the to operating challenges Hawaii, a a stable On serves that of consolidated companies we’re fundamentals us

our for different XXX state for through social many power over and conditions. delivered has years utility Our economic

lower we Maui. During March, this last Oahu indeed XX% week X% on and lower the do higher kilowatt expense sales. period, loads, we Island, bad and lower on debt lower of Hawaii hour in saw and COVID And expect

Given regulatory fully structure, decoupled relates to utility’s the the liquidity. primary financial effect

the our revenues until of enables utility’s by placement, balancing first meaningfully steps PUC, including taken offering. We’ve and lower cash which target loads, the to private collections under included XXXX under approved which strengthen delayed recovery week a position, decoupling expanded in through last bond revolver liquidity the priced revenue be Although despite mechanism would account. green the an that

kilowatt lower XX%. the and standard portfolio to our in also denominator since The comfortably albeit or hour the the RPS fashion, expect RPS lower renewable RPS a performance, sales of goal loads positive XXXX in impact we calculation exceed reduces our

continue processes and remotely. regulation regulators Our to workshops regulatory performance-based final minimal disruption. year-end proceeding or docket decision for on remains utility by track PBR The forward move with with

in July. is rather schedule moving than the now forward, is XXXX also Our Electric interim rate an although chase order Hawaiian for decision October,

is constructive As process audit a part implemented the in been report and of that rate PUC still management audit. That’s case, the expected a May.

an cycle. XXth, case terminating the order April published mandatory the rate On PUC triennial

As such, case longer rate there. a and options Electric we’re to file Maui no required our we are evaluating

These conservative for crisis lending it other our ASB to the helped financial XXXX-XXXX and practices well position served hand. at and perform compared the banks risk attributes a loan has bank Our years state and portfolio. XX for challenge has culture, well during

income due the economic bank the lower contributor to rise While will losses slowdown, remains interest to and decline across rates HEI. to good credit a net will due curve the

stress scenarios the than capital strong COVID-XX. Recession, severe ASB and anticipated the and after independently liquidity banking from including is testing, implemented crisis Great under of conducts what regularly more maintains

industries is loan focused by with secured has industrial Our and accommodations, such portfolio and foodservices, bank to that a real estate. and limited also exposure commercial as retail, highly

see capital do require we that would point, this inject into a to scenario bank. not the HEI At

Protection retain However, bank capital it otherwise the ratio, company. to the dividends Program, leverage have supporting will maintain under while lending the Paycheck to holding in increased paid would target its

that company, our our our structure strength while we in is liquidity to subsidiaries event ensure holding it that needed, source and capital grade shareholder can maintaining we be investment the the dividend. to of our have At a enhanced unlikely

stability important of And the no dividend during have an XXXX, our is Great dividend less We paid today. Recession. uninterrupted including since maintaining the

that bank have in crisis, well-versed judgment bank Hawaii, was and period. teams of here and traded strong in the the and led CEO through and CFO We experience, through companies crisis have and decades a our our management. executive led Rich HEI Recession, are through of leadership XXX utility to and another Great of experience recapitalization our guide publicly a bank team a this I incident with Korean

actively engaged former utility companies this steered very through been Board their chief and Our we’ve in period financial members executives who CFOs whom crisis with the risk and bank include CEOs, as officers.

we company’s at higher essential the for our bank. those first saw services credit from Despite and quarter, the expense debt losses and at utility We provide, allowance do COVID-XX. impacts in our expect we including the beginnings strengths higher of bad our

With for debt, the first the but exception bad in were costs next few not increase the significant COVID-XX-related may quarters. of quarter

deferral a a recovery of a for As request time. at to result, later seek plans costs those filed COVID-XX-related of and the utility costs has treatment

more underway, was management us. efforts planned an utility expense. focus And particular, O&M of we area to have impacted COVID-XX, do than for than while quarter first by other expense Utility we higher The number have do. items been in a of work has O&M

I’ll discuss results, quarter guidance. now and first our Greg? Greg liquidity to our ask our

you, everyone. welcome, Thank And Connie.

I’ll before moving results, to outlook. speak on our briefly QX our

at statement our at slide earnings COVID-XX granted expenses debt per expense earnings is for future COVID-XX QX year, per million were the the to utility share bank. $X.XX until utility Bad will provisioning and recovery. expense treatment continue quarter. at we bank, that compared impact both impacted $X.X On expense, $X the expect our deferral the utility additional $X.XX in of pretax, last million QX also ROE. year of the income debt higher bad for And and to debt over utility impacted than prior share X, including

crisis. were impacts have we prior strong during strong COVID-XX did start over to economy of And negative Hawaii optimistic unemployment from increases one once quarter, we’re X%. we with strength year the had showed Loads the nation’s the prior and the started future, the the lowest pre-COVID a Although the about year nearly also pandemic. year to of of very us our rates. makes We through the the

increase interest of projects XX, interim the million $X The the slide mechanism from compared were On West million higher million drivers recovery million These expenses revenues; and and in to earnings quarter Loch million due major to in debt higher and of under to compared increase items costs. due variance by the XXXX, of utility deferral debt the onetime expense expense expenses; due Grid to $X higher $XX.X rate lower Modernization primarily $XX.X to million revenue O&M refinancings $X significant of were of recovery mechanism; most first at QX revenue lower offset treatment from XXXX. COVID-XX; bad adjustment previously benefit -- QX incurred rates. due outside and a absence work onetime an certain to ‘XX, increase the were $X management for service in vegetation project increased

$X reimbursement we -- higher first the from in ‘XX, renewable approximately Loch depreciation income fewer absence $X performance in in seeking million mechanism, in of XQ assistant quarter of we in was had that projects ‘XX, AFUDC, incentive from $X received placed we as $X from addition, West mutual absence million particularly procurement In net after were expense, and lower construction received the million work work the there service lower long-duration of the million progress, November. and

$XX.X income net down American’s $XX.X in quarter the from previous bank. quarter. million in was million the to Turning the

as income taken also the was reminder, million of fourth mostly XXXX, the the $X.X by XXXX income net to provision down versus a quarter of due $X properties. COVID-XX. the to former included of sales Although quarter due million first Net from

for local basis COVID, loan quarter the are losses XXX our we average in points ratio our Following above allowance and basis who and is about relating provisions lease well-positioned, of our peers CECL XXX the adoption and we believe additional to of first points.

We of saw an in quarter basis. portfolios, growth loan loan of with on commercial commercial growth real growth strong X.X% well deposit also the during X.X% estate annualized as -- as solid annualized strong

transactions of some as company paper and both holding committed spend positioning runs time us credit migrate we’re it increased that allowed to COVID course. commercial away we financing from withstand at to ourselves impacts In the like April, utility how its I’d prudently on the executed and capacity the to markets.

issued full be as of HEI liquidity up pro the strength company forma million source met. the it $XXX The combined enterprise term XXXX of million credit needs XXX-day $XX strong and serve a million for capacity freeing facility. -- holding a $XX loan, can ensures allows cash to

million bond repriced $XX and revolver. used the a placement, was and capacity million a on credit -- new of included Electric $XX $XX added of Hawaiian million to through free-up which revolver The also launched capacity million and $XXX priced portion. private green its private placement

likely an utility The XXXX, be up the freeing in COVID liquidity term XXX-day challenges will the extended due will loan customer impact. with an XXXX, refinancing when have most to into existing maturity

times. we transactions, have utility these will over increased at X liquidity With the by

our we at company at consolidated full ample or the Loan both With liquidity of of credit and company, availability facilities the the liquidity. believe Bank the and our FHLB, Home utility ample Federal private ASB holding placement, post-closing to utility’s has

and strong our investment We’re grade state’s to support our recovery commitment a position economic maintain to ratings. in

over XXXX, our million at only maturities maturities at the the remains $XX of over Looking the debt long-term utility. -- remainder

maturity holding million modest a the quarter expect of in in have that which $XX first maturity. refinance company of XXXX, we We advance to of

very has Turning the the strong the funding scenario, scenarios is FHLB $X sheet that don’t severe need it we’ve times of any bank such the bank it’s The from refreshed is company and combination to approximately during strong ratios The under billion capital quarter. and resilient to holding liquidity stress the why self so balance as we expect and securities. unencumbered including available commitment this. ASB’s conservative to bank. during with from challenging a capital

the as be dividend on period. this ASB’s reduced and company PPP we higher ASB will loan holding capital retaining such expect year such to support expect to as during costs this programs credit focus customer to growth, cover to important as We and

the On previously level dividend from slide meaningfully from the don’t we XX, expect change communicated. utility to our

lower, will is ASB to earnings. contribute to from profitable expect dividend its that the Although we continue operations

$XX equity cash reinvestment of We can turn million to needed, on remain can levels. on incremental rating grade and and generate our historical cost-effectively program about investment which committed based annually, if dividend

a equity don’t However, need we issue year. have we believe this to currently

in maintain We run while although longer and capital, we dividend growing scenarios. expect and liquidity the around to impacts term maintain dividend, scenarios line healthy growth, under these the pandemic’s external have our earnings with we dividends

Turning to the outlook for the year.

June We’re of the for currently COVID-XX-related get we’ve utility. million is by important an requested deferral $XX forecasting expenses decision the treatment driver approximately at Whether we XXth. year,

million. front, $XX X% Hawaiian or requested We regulatory for shifted the On timing increase Electric has interim October. originally about case revenue the rate had to decision

economic we regulators. last current not increases the an And However, year receive Electric we increase we peers not light that how the Hawaiian difficult are granted the by of being did is customers. some that and environment recognize our for recognized in interim

find in -- expense offsets lower tightening our everyone increase like We’re utility belts, expenses and to our for earnings our revenue community outlook. maintaining while any to offset

COVID-XX our half decoupling the went effect. in and of help quarantines orders travel impacts were Full air latter stay-at-home will stability utility provide year. as earnings into mainly at the for March

we’re considerably insulated this breathing stimulus last room including funds prices for through bad fuel we also lower Protection of The year. true-ups bills. impacts customers. had which get our the Paycheck loan lower some March incremental on up get the level that federal pay coming customers states will are debt for unprecedented Program, upside as spot from an to the we and While bright provide load expect more We’ve of versus into don’t in expense, was revenue,

of million to -- to in delays. downside forecast XXXX, we CapEx potential in $XXX $XX million about $XXX we We million approximately now COVID-related see approximately are as now due

residential home. we’ve As avoid now customers to scheduled working delayed maintenance some from I outages for mentioned,

through of through expect approximately In energy we rate year are period, renewable we’re depreciation. include this week. selected CapEx later potential our made self-build out and to first not it about does guidance. or XXXX case ultimately However, any CapEx per the times of and whether storage XXXX This $XXX million term maintaining the longer average We’ll projects find stage projects that those round the RFP process. X X

to to through markets. expect and earnings forecasted retained fund to the CapEx utility continue capital via access its We XXXX able self debt

Turning to and drivers. guidance ASB’s key

in net elements I for our to which and the us it’s our guidance difficult guidance, our And left. bank $X.XX in say is that local COVID-XX asset on provision wish event to the shown no longer such asset including as tells margin impact better year growth, Experience should timing bank effect. in lower which on manner and and until will sense have the about return standard how assets. of I $X.XX economy that that prior know we is will a Our -- is an quality included interest reopen.

provide that guidance EPS early and unable we’re Given return to as uncertainty, it’s guidance or provision to the well provide bank. on on for too consequently, asset

pre-provision interest of noninterest continuing impacts expense, COVID-XX. of visibility have noninterest is on which of the However, income, we excluding snapshot income, environment, guidance provides the comprised which do provide profitable of sufficient bank a operations you this to a net also credit level, economic pretax, the in

our We income credit to of COVID-related That and significant impacts. for million the million from the $XXX uncertainty XXXX. position along strong estimate $XX gives us capital headroom with range be to pretax provision bank to absorb reserves existing income

had environment margins. thus rate Fed in expect the interest pressure have March net quarter, in in first moves to asset by interest greater yields impact a impact and in a on QX, the low the further rate modest While we

loans LIBOR benchmark in based which are commercial effect see to some and in Floating expect saw and such impact on rates the QX. from rate reprice LIBOR-based QX link our lower on We the they prime change portfolios to full the in tied. as debt

expect We rate we of QX minimal that floor line expect impact at of consequently from our lines tied. further would also credit portfolio. and the saw now incremental portfolios to prime -- price Those we credit lower do which repricing are some impact from equity home not of their

-- rate much will Fixed mortgages were refinancing fixed repriced rate of at more XX-year a slowly as existing through mortgages. much debts reprice such --

cost of improve to very-low at net lower basis XX in first points the already room our there’s funds little Given and to move interest quarter, margins.

ASB’s This below during Hawaii’s financial loans. other charge-offs crisis, the true the been continued and national average. have residents was pay the consistently mortgages to net as

our XXXX If look you our through period, point and provision averaged portfolio X.XX%. peaked loan the at XXXX of at expense X.XX%

to size of -- that of approximately apply you’d our million. cost you portfolio today, you’d peak average credit If million have $XX have of a a an and $XX

through utility of XX. Turning Slide to We’ve each drivers the and our for bank. key walked

reaffirming the midpoint. later recovery, impacts bring guidance COVID-XX-related expect it is the or and now, range, and utility utility, deferral tied This granted of XXXX pre-tax during all At the for So, the COVID-XX uncertainties because we guidance the the together. cost is be our we at are of assumes currently I’ll below line. recovery. we’re pre-provision bank, regarding the providing At to provision at economic to

We income, range noninterest million pre-provision income income, million. to and which expect net $XXX expense pre-tax interest from to includes noninterest $XX

growth. We low to continue earning mid-single-digit asset to expect

low current the X.XX% net rate our range. in expected Given X.XX% to interest margin environment, we interest

guidance $X.XX $X.XX Our EPS company to at holding loss. unchanged is

that it’s earnings consolidated are too bank per time. early unable Given to at the provision, this guidance provide determine share we to

make now will closing remarks. Connie her

you to And us for Greg. joining again. everyone today. mahalo, Thanks, Thank

our community, the help our for way companies our time of difficult a is state to we proud are stepped this Although recover. up have

is COVID-XX road the ahead. recognize to that a customers are we course. help And weather we runs storm think there its long and well-prepared as we However, our

hearing look to forward questions. your we And now,

first [Operator Please Bohlen Instructions] go with Our comes Jackie from ahead. question KBW.

everyone. make Good a Paycheck I items I couple sure correctly. morning, and heard to of clarify Hi. Program just Protection with the wanted

is So, -- roughly that I $XXX about for applications. that X,XXX said you right? hear million Did

that’s -- April. through that’s And Rich. through It’s Jackie. Hi, Yes.

Through that well? as there two round some includes in Okay. So, April?

Correct.

Okay.

I average a larger at little it is XXX,XXX. number, the a bit than that seems when look like size So, loan

are bit? in a moving the larger to average loans there size. that there that are that. somewhere average in between guess fee or X%, some the on is a X% maybe little accurate higher towards would loan end, I Is there So, given It’s the

correct. That’s correct. That’s No.

less two couple have -- bucks. I have think probably are a that in million bigger only We loans we there than of dozen than

hit really businesses. the we small So, the sweet of spot

obtaining Okay. for to these X that? Feds are balance looking at you liquidity And you or existing sheet funding fund facility are then, through the

sheet we need to do that take Right we’ll balance the we’re existing if Fed it And we’re have on primarily. advantage balance Yes, to. of but up now, set the keeping facility, sheet.

As too them we as to significant of come don’t forgiven will you last know, long. expect get quarter. the we second portion A out

sort of a So, temporary spike. it’s

That’s And the in for the a Okay. going then, and to mix thank the exposure I grades just slide bit just Thank with but for you. grade, a helpful. still low portfolio general at in during as terms X% of I’m XX/XX that you I deck. of it’s the those and within the that flipping you of portfolio. or downgrades similar it’s understanding pretty timing, curious. XX% remarks. that early to through investment Related detail where was the on through quarter? little piece it looking -- this were you at added to was given that being know see is the any the prepared did

consistent. Yes. It’s pretty

haven’t We that downgrades our on in time. seen exposures

builds into how outreach the might personal the for then, the be that into some might And that had and how in in loans, if plays that deferrals reserve you and be provide could just you just that of you quarter? that secured color any terms doing you on granting, Okay. and of played

Yes.

a bank, deferments and we balance customers And is across you communicating through about It we’re as consumer. not of the -- help referrals -- In as with the across we forgiveness. XX% little we’ve that This a had others we’re be more a commercial consumer this know, customers to about -- the need portfolio, offering is represents book. the than to X,XXX of So, that portfolio. and the work ask of for deferral, happy unsecured, you. out we’re

as about we’re our starts to how that sure resources well. you’re when And make up on going mitigation loss we’re make side beefing communicating up. this again, payments Let’s

through. our against at goes look to and it paying book. bit we to that the it, national quarter, as the out felt than it coming of of bit we Hawaii a So, But a play debt. deterioration mentioned, we have was as the how And payments collectability put of average little reserves in little up Connie see tends we’ll better back as on performance prudent

that So, continues crisis this through that we’re hopeful too.

that’s remembering And a granular very helpful. That’s Right? Okay. portfolio. if correctly, I’m

Right. somewhere $XX,XXX. size around loan is The average

it’s size not loans. a very exposure, individual So, small very, large

Okay. And then, step one just last me, for one back. and I’ll

Looking to you’re that on the like and sounds XQ, repricing some pushes and new the going margin place that net takes understanding repricing interest there. following specifically in have at of rate trends start It generation you how outside of of in year. that pulls half thinking about stabilize the be could portfolio, Is may the to it? that NIM a lower in the the latter the

variable has take severe pretty been since loans. since they’ve that you basis benchmark, That’s been can The we moved. XXX is the the see year-end. Yes. just -- on LIBOR points That repricing biggest on how down the hit

interest think. significantly on lower we we rates much see And, to doesn’t to the further to as then have evident, it So, expect further expect would And I don’t wouldn’t economy more stabilize. becomes the go, repricing. clarity

it. Okay, Thanks, I Rich. great. appreciate

Okay.

ahead. comes question Paul next from Please Patterson Glenrock with Our Associates. go

Hey. Good morning.

Paul. Hi,

all just So, should on of and CARES. as sort general, How and to in familiar think I’m that’s -- sort of stuff going when of deferrals what’s just these run of what the are sort general, what But, with sort there a anything stuff that And just I about we XX more. others. seeing just side? [ph] reserve the perhaps that’s with And that? we XX the that sorry, go should unsecured talking if we’re any the has as stuff. deferrals? for over the bit associated you or that -- the mentioned about little bank somebody not mortgage asked that. think the mean, happens in non I I impact on rate? But, the Is consumer I’m when been wondering about was missed the you accounting

Yes.

the Across has accommodated. this So, across we’ve we Rich and the for -- that Good Paul. book, XX% the of accommodations hardship that morning, is have asked book roughly again.

side is about book. XX% of So, the mortgage the

under the as the doesn’t And to released, customer so, was long the guidance situation it and the hardship, current prior that as was pass-through the status. affect

are And So, to of they’re -- not were the was going for that the adjustments again broadly, consumer make we’ve factor are that’s of provide that we But uncollectability current any not on we on initially considered before And unsecured, to determined for certain are additional book, where good with though current a some the considered to book. still qualitative that loans. We -- parts case loans restructurings commercial prudent. of that provision. elected the required be TDRs. that some of

regulatory the guidance it. been, has as through I we constructive So, come think,

going company how we’re what what comes is so, how to economy going determining clarity on then company to we’ll see we on to the open up by by the going open is we again, as industry the up, as And basis -- a really and do. be really tourism is exposure exposure

are in XX mean, these I months. for things automatic sort that guess, granted almost. And understanding, Is just my about then, right? And they of though, be, Okay. I can to general up

long. that No, it’s not

able up to time. is to current we’re months. currently, six three -- would doing months at -- be We’re We the a

we March. So, in late these doing began

additional You requests had of leveled initial -- the surge sort an have off.

go the who modest. of discretion then another has have, advantage And fairly that. that’s of that do So, end three-month the people on end the and at those terms. wanted it the through quarter of take this and to our needed early since the We’ll at for quarter second extension of towards been stages I the growth considerations think to and

of of in take it based quarter, on look. end very we’ll easy did -- the our first on And people to We those. make the advantage we how for second call that round, at the make things

is guys there that least the take -- Okay. you you And, Governor, very-dependent And I pay know employees what for to in that. have suggesting I And you also cut. is XX% instance, have public you. at I a are on tourism, was did report, used and then, guess, references But, guys others to different, think comparison this XXXX considerably you, what quite guess. I on guys well,

I’m should I saying? kind get get just sort as have just Do of here. if kind I’m be activity thinking might you trying terms to in so, loans what exposure take sense a to different. And mean, of of of what we were what about that I’m to some place, that to to stress mean, follow trying I very what sense you. feels mean it and just your as

the That provision. around would called be guidance

we as it’s that said murky. bit So, a

Relief $X.X individual billion Act or is guest Coronavirus in never CARES the been I provided search like a situation. kind stimulus think will But specific coming my on it into be billion draw historical close any the of the -- to while context situation. hard billion $X.X time there’s the We’ve that’s in through by this comparison one anything we The PPP there’s are $X.X stimulus for round billion Fund, that $X.X think, in I two. the consumer. get payments is the also the coming to getting -- to through of out

So, we’ve dynamic never seen that either.

things the think there’s out. factors time need in So, there’s in to that a positive affect little to But, going negative things both play it I that sense the just we’re and ways. think sense I

you say so how that how the was another XX% Okay. on you. and in see But, have hand healthcare. government, that’s but of that’s what number there’s on many defense -- and probably is take then pie of that X, and education much in -- the -- up Hawaii would Could chart be that slide I involved other you workforce happening, XX% have sense, a if guys

you So, guys I’m What thinking just -- people of look if the kind who about with do are they reduction guys have me? wondering, theoretically do follow that? might remain terms would number do you numbers? in own guys you that metric Do guys of at have the As your of -- just presenter sense a employed? of or workforce, of associated sort face you any you

this is Paul, Julie.

the XX%. check it’s double pretty will sure the We number. in I’m of range about

Okay.

a be just said Governor’s clarify also might would be that resort. that and possibility last it a Paul, to And the signaled

I’m sure, it have well. No, they’ll resistance Yes. as to

Hawaii I what that that Just apologize completely, would end of Is the stuff. it? the on of for were of not what saying? the finally XX% That they be year. normalized is Just just what University XX%, by activity getting --

of UHERO’s that that because did And March, correct. look really the view talking end a go pessimistic payments he That’s in And this stimulus not was urge was tourism. as of include effect has forecast prior for he at little you take the a of I about. to more example, the included which the forecast Rich one, is now current on although

everybody. of nature the that’s So,

all as develops are to views and economy. see them and ball into come that and look put and what determinants the the up look at progresses, crystal time all together actually with this within We’re different we trying

go question comes Charles next Fishman Morningstar. with Our Please from ahead.

have mainland hurricane have in for where On of what storms unusual they a track in COVID-XX type anything we U.S. to much respect Is that the of deferral you happens with there get deferrals record of expense? comes a the I with this how a deferral guess, and pretty the precedent expenses utility, Hawaii when through. Southeast

turn the a team over that don’t on Why to at regulatory Joe Viola, utility?

experienced is Joe costs. usually we amount have Viola. significant Yes, It’s on This for Thanks. threshold that. in Hi. Hawaii of deferral for approval

I right. Difficulty]. in on [Technical utilities, for that past hurricane-related mean, of actually lava our for You’re incidents some the

So for extraordinary treatment there is for costs. precedence deferral

a get that fair unknown. assessment? you’ll realize that that But, of So, certainly, get you fair I guess, as would chance is holding that decent going you’re you’re a a there’s an there level I I confidence it. Is think, I mean, to can’t. and

our is probably what Yes. of yesterday, the important most Charles, Just a number just Commission to elements. which Hi. said. Seu, to This Utilities Public Electric? Joe had Even But add basically an addition these authorization issued Hawaiian not And Scott if record of in disconnections. that given results us suspend to suspension done the disconnections. it’s regulatory saying order, to you’ve that establish already so, our from that meanwhile, assets to was costs please

think regular the a is signal -- to we’re of costs. our to tracking that’s these one these then So required costs that Commission to updates Commission pretty file start good and I

that? believe of little mortgages bank. to a the book percentage what pretty to give said is a commercial was residential moving the Greg more then, book? total I that And Could Okay. color material percentage loan mortgages, loan you portion Like, is maybe what mortgages. the of

Yes.

if slide it. you a material more that in there’s you gives the So, to on a little refer -- bit

shows you billion we Slide it’s think, book. about a loan I $X.X in XX got back the that

the look estate up then, home other to there. you mortgage within real that you’ve at equities, If piece, and gets the counting the up the And component of that XX% add got then you -- you it gets residential about right you book. $X.X of billion commercial

just I had that a before. slide, and that’s a I deck it. in never I to include Perfect suspect noticed slide you never every reason just look at

Okay.

We might That was Charles you thought ask. for today.

you There go.

slide that perfect. is Well, Okay.

Charles, this is Connie.

me just add and attention. to call your that Let

do XX, the the portfolio. we that and shows secured Jackie loan of of was tried the out everyone referring of estate to then and have XX on which loan there, Slide which basically stats XX% not total Hawaii, national sense loan to. has break about so thereafter is We’ve by portfolio only that give but So, a syndication is the real quality XX, here slide portfolio the some slides XX, even XX, in

it XX.X%. the mortgage I for example, loan that portfolio, you will to portfolio go for for value average residential XX is show to So, Slide the the if

much in of how So, as loans that these is sense a buffer. equity gives one a you each of

also than about think think, home equity. might I portfolio equity our there And you Right. see that on you can home different is

are estate and values always very flexible Hawaii. are funding in majority about -- of And them as lot the a a -- of strong strong of stable People and it a as low. use real source LTVs on has been position. a estate what almost sort values of real high think ours of in fact, A a lot first predominant So, times second LTV. people mortgage --

what home quite well it seen books we’ve perform And be. would of your So, initial quite, not perception equity time. over it’s

And you of was for example, talking the Jackie unsecured loan size mortgages, for the granularity $XX,XXX. also personal average residential the about, see can that $XXX,XXX,

we So, portfolio very have that Community quite granular. is Bank like

I’m you walk their confidence Okay. that got but home analyst, people loans don’t a like not away certainly from Well, to homes. or that’s again, bank their give to

confidence years of ago level suspect experienced added that crisis. I an plus the that’s in you So, XX last

it’s when we especially in -- limited that’s And Hawaii, Yes. said true hard mass. we so land as have

a So, it’s home. even so hard get to into

our question-and-answer call for concludes any I’d closing back the session. This to turn to over remarks. like management

care. and anything and free you today. to please your for stay Thank appreciate joining I and let certainly us you questions, know, get in else, please and Take have if us all feel comments touch healthy safe.

presentation. attending Thank for now is conference concluded. you The today’s

You may now disconnect.