Hawaiian Electric Industries (HE) 7 Aug 232023 Q2 Earnings call transcript

Good afternoon and thank you for attending today’s Second Quarter 2023 Hawaiian Industries Inc. Earnings Conference Call. My name is Jason and I will be the moderator for today’s call. [Operator Instructions] I would now like to pass the conference over to our host, Mateo Garcia.

Thank you, Jason. second earnings HEI’s to everyone quarter call. XXXX Welcome

Savings Seu, and Kimura, other CEO; me Teranishi, Electric today Ito, members President Scott are American Ann and Shelee Joining of Paul senior CEO; HEI HEI’s and CEO; President management. Bank and President and Hawaiian CFO;

are our earnings website. Our call and Investor the presentation our in release Relations this for available section of

expectations Factors can will Relations that forward-looking found in As statements be differ made materially today’s and to a presentation, from cause could section our call. be actual in website. filings our results reminder, on of SEC our Investor the

begin will Scott with Now his remarks.

everyone. results, and the call Greetings, will our update I you further today. over to on then turn Paul and joining our guidance. you economy and Thank to financial our results us whole of give an discuss overview businesses for the

work businesses delivered year. million and business quarter, net through $XX.X and it of the has to continued combination income $X.XX share $XX.X in HEI environments. earnings Our last operating compared for economic same to second and the million the of of us quarter as results in and $X.XX Both different quarter in many generated well per cycles solid companies

to seen earnings Despite within and contributed low-risk the PBR this headwinds our or this utility’s quarter. new bank the our sector community the both has framework, execution ASP’s year, banking model performance-based regulation,

capital and this executed ARA although operations to our expected or as resilience year there year, pursue Our we the energy the utility well maintenance allowed ensuring elevated year revenue on half in annual And utility this within transition. during income full reliability clean be expenses were has we our levels. aggressively system continue second million. of the adjustment plan its net The with expect the moderate to grew $XX.X to expenses and to quarter, of

framework with predictability improved The PBR we visibility have work pleased and the well provides. framework us been the to continues and for

Our industry-wide net $XX.X impacting million this the stability and compared quarter, to despite quality profitability. remained bank ASB’s margin of peers grew deposit supported interest in small quarter insured retail pressures the cost by excellent, to Credit sector remains continued stable. primarily relatively our funding compression net and Hawaii’s mostly economy. income base banking was

our recently recognition am to year. prestigious to delivering Hawaii named very banks remains Overall, bank ASB this continue that to bank only well was list, America’s value Forbes enterprise. this to positioned to our say proud I the best-in-state in receive

rating and BBB upgrades we ASB’s institution the credit and addition, providing of stable. Fitch an under as utility were In Fitch. from near-term manage at utilities stable a reaffirmed low-risk, time. predictable role more bank’s the received ability based The recently on also PBR, targets both HEI our over renewable outlook construct ratings upgrades to dividends management’s well-run regulatory with

play out. While to detail. been of bank would in as expected mentioned in higher are continued cost to we deposit cost likely cover we remainder of funding And ASB year. we funding Paul the thought which for pressures, quarter is the successful a revisit levels, shift that that persist has for maintaining to quarter, continuing we have Last sources the seen more guidance guidance some result trends given we a bank, the this will were of revising

the to Turning utility.

we improved and customer average We significantly renewable significant filed for our affordability proposed as generation. and would distribution firm or and as integrated while plan peak well last on grid customers. the clear a IGP, Oahu, transmission September. require in goals, decarbonization from final in XX% residential investment new while our since proposes reliability, systems plan, continue late clean advance our reliability with affordability. resilience year’s May, last path In forward to bill to meeting improving variable year initiatives which down our has Affordability energy state’s our The prioritizing and

the of renewables market The years plan highly energy-reliant planning and a and structure powered on is stakeholder-driven grid. is the social over engagement distributed governance focused includes result analysis IGP robust a and aspects. for technical, and X stakeholder industry-leading effort Our culmination of

Our IGP of request proposals, energy by and milestones Stage renewable achieving emissions our on The XXX% zero net is carbon to clean for renewables the crucial RFP. or X state’s for is with XXXX. utility goals energy track

Maui best Hawaii into and of selected For list framework. announce portion the selection under of bid August the due from for utility Proposals the the currently consistent RFP is XXXX. Maui variable the October. and generation the the priority final and generation the late award on with Island The Oahu, will firm RFPs, utility group the competitive offers XX, of final are in the requirements RFP bidding portion is reliability evaluating

fuel-powered submitted steam firm power The Waiau generators more on the generation best smaller, utility and has its fossil plant aging offer with to X The final repowering provide by proposed project has replace proposed renewable the would new can firm to generation list. to of units. expanding priority up Oahu’s on flexible The The fuel units selected grid. and efficient project advanced back resources provide portfolio the renewable variable Oahu.

operate of and we highlight our or us affordability. help enable incentive provide reliably efforts of data pilot XXX,XXX and in connected are performance more our which tools schedule customers. distributed on They or that a mechanism that last interconnection our currently have faster, our system to affordably. energy now resources, are get the grid further to rates, system-wide will meters time-of-use achieve efficiently, serving PIM DER, smart phase deployment. and We will DER customer to to our contribute contribute help deployed ahead about and Advanced My smart us is meter XX% meters

be the compared headwinds Slide continues bank despite peers to the the well X, to on year. positioned Turning to has this sector seen ASB

customer local performing are loyalty. banking characterized We and market well by in stability a

deposits modest points. flat Our year and of or deposits basis were base to at of FDIC remained down quarter and XX% collateralized. compared depositor end a Total at are strong second fully insured deposits stable end, the the essentially X

and contributor $XX consistent HEI flow to cash during ASB and paid quarter of the remains million dividends. earnings a

health economy We trends borrowers. credit of of our the in financial see continue to evidence positive of quality, and stability our

most Our saw the secured, ASB’s delinquency of liquidity of which approximately quarter. rates uninsured of position with this Xx high-quality book, Hawaii and of real low remains is uncollateralized excess estate a capital very net continuation charge-offs amount loan strong or deposits.

strength XXXX, the throughout strengthen projecting indicators of to Japanese in a driven Hawaii has market by forecasts strong spending. labor X, year. to recovery in to healthy Hawaii’s and Turning point tourism delayed in construction state’s market public continued Hawaii sector despite economy. continued the growth of Slide University provides economy, to key which continue Economic Organization, The regular Research our is Hawaii

near of in from Our in levels X.X% and In XX% the of state’s rate than from last an have XXX,XXX was X.X% national arrivals average unemployment over June, improvement visitors XXXX. been of reaching lower in levels. year hovering June, May Visitor X.X% Hawaii, June arrived increase throughout pre-pandemic X.X%. XXXX an and

emergency were sales mortgage and to doubled XX% key and our of June market market lower Oahu’s streamline International is aims housing to to median proclamation And developers Hawaii’s state’s creation July, over housing. the prices empower Hawaii’s the near prices a development given nearly this remains year-to-date June levels. contribute have housing expenditures volumes record year-to-date. supply-constrained policymakers. and still to spending our see proclamation were million. been year. compared opportunities arrivals housing up continues year high over on up focus robust XX% Visitor are of rates, while signed and to of process in Governor across to And last $X have compared more The stakeholders year last an state. Green

Paul further to I call discuss to outlook. will now results the and our financial over hand

to quarter, net grew O&M Thank challenging has were $XX.X and EPS income during up timing. start a the with Consolidated expenses which despite of from of you, of across The rate grew Scott. $X.XX last amid The margins elevated interest results that I some on for X. net pressured the $XX.X million will net Slide the industry. income due net $X.XX bank EPS year. our income interest of environment utility million quarter and were

at XXXX. year is to to X.X% XX.X%, slightly bank XXX gain which was XX-month on the months ROE and points Our ROE primarily an the basis first sale of last the consolidated from up same due at higher on down Utility XX.X% last remains to compared earnings in year last last prior quarter XX in ROE due recognized remained a basis stable healthy annualized quarter year.

higher to by bank-owned and non-interest bank real On income interest compared gain year. Slide loans. to higher higher primarily and credit higher X, the lower as losses and was compensation These FDIC on higher we show fee major were the partially expense, insurance variances of across impacts last from second of benefits as income, due offset to and primarily a sale estate premiums. higher net a expenses income insurance life income due enterprise net quarter due primarily for on and fees higher to well non-interest interest income, provision Higher

the loss, fossil On higher due holding CapEx, poll related in O&M, costs, The environmental overhauls and expenses, due from costs higher primarily higher and was by revenues distribution other offset expense. ARA other and true-up revenues, and cost costs, to company higher interest matters, of MPIR increased we a higher to services segment higher higher to offset legal side, from increased fuel higher revenues, expenses infrastructure. billable by partially facilities transmission performed primarily saw utility higher employee benefit with partially AFUDC net fees outside risk-sharing our labor These and quarter. one-time associated and and higher are higher fewer the

higher supply capital the track including same execution availability year-to-date utility labor of mitigate of and million year. the Turning with planning material chain taken Slide steps resources. plan is X, was to at utility $XXX about their time challenges, than to with advanced million, $XXX last CapEx the on for The

$XXX the the our be to of expect For $XXX year, CapEx we range. top million guidance full to half in million

O&M for X, Slide remainder year. of utility saw utility the drivers earnings elevated The the the expenses show quarter. in second we On

and The that moderate of O&M and in due fall and was generating half were there management the approximately year we peak. half $X first accelerated into to the timing-related included expenses year. timing hurricane of the the maintenance elevated second However, preparation vegetation season of expect generation expenses for work station million to in the

year O&M We increases still key remain incentive Performance or and for mechanisms, Efficient mix total originally focus are of expect for million within remainder sales inflationary $X forecast. under the contributing PIMS, our to adjustment key a still the a of be manage will of net total this different the ARA. approximately of the of although a also than earnings. X.XX% will to driver year execution expect full allowed we us PIMS, area

due to during lower Fuel And Lower our of quarter, was customer contributed beginning fuel cost of net year. prices the set costs. fuel recognized across we fuel prices fuel our mechanism on the being our have the the have million from decreased builds based which $X items. second approximately also benchmark, to costs risk-sharing income than lower since January

We interconnection increased as we in of in ramping recognize we repair to are as also expecting PIM a seen no full up any to ramping We year approval for generators work in from RPSA Island improve delays interconnection one Hawaii on at third-party-owned our renewable projects. expect delays as times renewable DER undergoing have rewards two our our generation. other as customers after up well this capacity longer and higher award

the expect to offset RPSA PIM rewards from reward risk-sharing However, cost approval PIM our we reduction. interconnection the and higher fuel

our tenure fears long from banking we increases conservative this liquidity Turning sector serve low-risk work last the and This X.X to manage continued the bank and occurred pressures arising navigated loyal we deposit approach model the the the to as that this challenges years. with And has caused to interest model. rate our base, earlier by community industry-wide year year. lending, funding well to us rapid cost ASB’s of as business along failures underpin bank.

longer. a Nearly us retail As are years of majority the have our with vast deposits for reminder, or XX% customers from or XX been XX% of customers. our retail our

of more We customer relationships commercial commercial having XX our years. a accounts, XX% than have tenure nearly also with of strong

customer deposits insured uptick of continued FDIC high or level in This for as the contributes decline core customer XX% were have $X.X XX, to Total environment. base slight the security of and a were XX% our flat Time December customers compared the second our deposits first as to FDIC modest XX% ASP’s deposit the up quarter. X.X% inflationary we stability. collateralized roughly at to saw see last to of quarter our stability. XXXX. end of end deposits of were deposit quarter, deposits of very end to of spending nature as up, were quarter. deposits of contributes slightly long-term while of equivalent a is a billion The funding to of insured from the due

not seen mainland earlier bank result the year. unusual customer have a We of behavior experienced as any issues this

addition these pressures we see bringing to spending, in well customer seeking mitigate deposits. through continue efficiencies prioritizing higher some higher in However, as new to alternatives as and yielding continue to depositors we’ll cost

On high of This majority our of loan result the quality commercial quality is the banks. on ASB’s book mainland focus The backed sheet, by to strong. has see real asset portfolio conservative Delinquencies, and started of estate for our the of remain the supply-constrained estate estate and credits non-accrual real of served our Hawaii, as our nature we’ve well loan net real where loan book to quality book is located vast the levels. the loan charge-offs lending. of are bank of quality estate, real CRE side our the very the are all balance approach values loan markets. a supported The by very within Island percentages low of at broader

Turning Slide XX. to

Although on assets, similarly interest funding yield X earning funding costs, a our higher the higher continued rates net the basis second margins to quarter, are and industry-wide. which up in benefit was in increased points have interest shift have mix pressuring rates which

in due and to Our funds at was wholesale increase see of bottom funding borrowings in rates sized cost still compared up as higher basis a higher and second to basis the mix low the XX points to XX shift certificates amounts relatively peers of left but of can of you include quarter. was points The deposits remains to similarly slide. the

XX was to X.XX%. During points the quarter, down interest margin our net basis

compares Our KRX in of peers compression sized quartile constituents. the favorably top NIM to the and similarly places us

the the the for to net we in margin for Slide to drivers previously the Turning the lower be funding than performance mix year we’ve across and industry, of bank of funding are XX. costs expecting on shift to rest Due higher seen year full interest anticipated.

compared our we’ve relative to seen peers, year. are so expecting stability out this play and We far this

funding slide I’ll increases sheet and Our rate our in would being net in rate which interest limited our detail guidance, interest-sensitive to the Fed on expected our mix. in XXXX the composition year shift this increase be more reflects continued cover margin neutral affect. period the balance Further guidance immaterial next to a are to fund due left that

positive, Our than we anticipated. and credit remains very expect now for lower a provision outlook credit previously losses

We are seeing strong credit quality with low net charge-offs and delinquencies.

contributed expectations our controlling transformation continue have remains for to prudently continued key for Hawaii $X to Expense stability range critical million and outlook credit of year. of Our ASP in the a focus our a expectations now make $X while costs. the to investments provision digital management lower the economy in we as in

year. updated Turning of I’ll XX. the our remainder to Slide recap for a provide of guidance the expectations

O&M of expenses focus for and incentive We are utility share. reaffirming $X.XX $X.XX key our remain performance controlling management. of rewards achieving per guidance mechanism to areas

and near-term early cost approval lower having as to remains our we The other mentioned, in fuel strong, needs such As liquidity interconnection rewards. financing RPSA risk-sharing expectations PIMs, offset for the addressed proactively utility’s all year. expect

to for year. create remainder Higher interest across bank’s rates Turning to environment and outlook the sector. continued deposit the the the a margin short-term challenging pressures of

now current margin X.X% interest expect X.X% to the of net previous has Although to our peers for be year X.X% our to net to we in relative X.X%. the fared expectation environment, well margin interest versus

forecasting to for year. versus at Given we Still $XX $X loan million previously. lower continuing single-digit $X low credit million trends, stable $X provision for the a credit growth are assume to losses

and on we we indicated from this cost guidance expect pressures to macro would be to EPS $X.XX due $X.XX to funding EPS given trends. of margin, quarter resulting uncertainty continued interest expectation down quarter, $X.XX. Last the and we net to impact previous our revisit bank that bank $X.XX, now

to segment segments, non-interest share. Pacific bank the expense XXXX. we compared issuances other per for our a Due we funding be guidance combined expect the equity of the assumes to of previous guidance continue down on losses anticipate for has the per expect of $X.XX, $X.XX consolidated proceed $X.XX EPS We and to any $X.XX $X.XX Our the range our and share the share we $X.XX $X.XX to still year, this lower-than-anticipated Current managed to for do net year. gradual holding of The forecast the year. of second previously. the continued half Based through not is to expected expectation company balance performance, in increases this as within mix to from

interest unusually forecast related updated in impacts, an our overall rapid from performed the near-term and headwinds bank well bank in rise quarter. reflects resulting rates its the second Although some

turn remarks. it over provide will back now who I’ll to Scott, closing

and we both that today. on transition. largely continue of mostly rate Mahalo ASBs in delivered business need interest net cycles base to bank, model HEI and and Mahalo proven is joining conservative the deposit performance that retail and consistently the broader earnings make second utility executing the insured clean dividends summary, has challenges despite its solid and In face well reduce performance-based quarter. us banking for stability our HEI’s progress through and regulation, Paul issue to equity. Growing all sector. to energy macro the you The our under contributing at with income business different utility

businesses Our serve and to laser-focused efficiency, our shareholders management continues HEI’s team well. and combination is on of execution

for that, the questions. With let’s call open up

Instructions] Bank question of Dumoulin-Smith America. is Our with first Julien [Operator from

Your now line open. is

Thanks it. team. for appreciate afternoon, good Hey, I the time.

Hey, Julian.

okay? guys hear Can me, you

Hey, Absolutely.

wonderful. Just

rebaseline the how to about sort here here think be Or the and do level? ‘XX? the at Do side as into trends here in how point? I are the the up you picking annualize just here. going you quickly from you mean, think at bank within think do What moving saw of remarks, obviously, that guidance revisions year-over-year you and growth the about on real puts that the Just this mentioned takes? pieces here of incremental sort we this you you

thanks Yes, the Julien, question. for

we have the later of in terms would starting our year-over-year I of sort of are for in to now, planning happens But as quarter next then, guidance what and in think terms won’t things growth, of the we’ll course, first give the a And of year. process, when that until we’re next So year. in factors our rates, course, the growth, interest of the outlook head starts seeing and they right? Fed would year for drive loan year of that reduce those rates, where next So factor from some the here be well. ‘XX we’re

of low we balance for in single this digits, year, single As messaged growth we the – loan for do mid-single to expect be the – the digits.

activity. interest And out of rates interest of reduced side, taking the borrow course, have higher has – on sort also in loans. to mortgage lower led it’s As

is of of guidance. thing we’ve extent an mix as is mix shift of for our those trends To margin the affect factor will messaged other the that in our shift we’ve this a deposit continuing gradual are The earnings. important year, built seeing into sort right, and that driving obviously terms balance our change,

we of digits. the expenses I then, manage and our drivers. other over the long-term, factor low course, for of is say, mid-single expect sort So And would expense to non-interest

think those would year. of various guidance. we’ve in our this So next talking year, factors I about are But drive that given terms

we trends the although seeing deposit can’t terms certain we We growth to our feel we’re – like, there. in built XXX any of deposit – into guidance XXX of I’m in we sorry, terms call can’t mix. NIM that So not

Scott. Yes, is said. going Paul just to to I’m what add Julien, this

some of – from and has the whole I’m seen thinking this under course, Of year sector course, challenges. enterprise-wide banking has perspective, about been some this an

utility through remainder we we rest pretty remarks, for see see the of is there. As some starting the to we in to get challenges, of then, our of stable of expect what the will year moderating continue those the performance And projected course, the better. growth as enterprise, bank said the to impacts

through XXXX. working overall, So

the I of of combination. think value continues serve bank points the to utility well the to having sort combination and pretty the us

level annualize I confidence want would what I Right. still down that NIM get reduced this at the But quarter-over-quarter. But some you you’re level of here degree X.X? comfortable just here, in to of X.X will. the to here, if obviously, that that’s new incrementally that you know you brought

are the we into we’re it range Julien, that – That of putting see we market and that account trends. out takes Yes, the yes, what confident takes there. in here into we’re the effect in that’s terms Hawaii

of back right, in do us think Oahu. Can know you here mean, about separate are Fair released your I then scale to in of also And potentially comments think opportunity of procurement there’s not the or some that, you a you And about especially side the of there. there both and two projects, the come represented to here? awarded you as – you’re well. enough. alluded avenues that Alright. that I obviously, T&D well. avenues. give some sense there’s I how want wires side these investments as whether megawatts as Maui wire But that to

it. you to wires made announcements those speak October? generation can be simultaneously the presumably, the in late and If for will And

come a investment investment be – down group the distribution a the resources just just to The projects and mean transmission RFP. renewable Well, the the bit, then this award would we the energy that would is will for online generation. see added generation road these partly new for as the also the renewable investment support system more continued final distributed announcement clarify about I generation be in Julien, brought but and like. to modernization in

XXXX because I coming reference of online. of I that’s plan come I with new in timing of lot think aligned these would where – our and that to be the in would investment. IGP T&D made a our this that probably additional post Most referenced resources

of could maybe overall on do mean, you’d top scale? the said the call be CapEx any I to what obviously, And Got early here year in scaling on commentary into but of in of emerge? – and period? for current range that necessarily could it that it. half you but sense that Any indications four-ten, opportunities range that’s obviously, any about difficult post about process the think RP of ‘XX then what kind say the the you as

terms out in could plan, be. the could And some of But in that draft do plan, of in energy a do it forecast final obviously, investment. significant out IGP And until the we we what lot change those on plans Julian, investment renewable a of are building the of have filed. put that pretty finalized. infrastructure, is terms

have think a Scott but I do time. some of over there’s – XXXX, portion then mentioned, that’s post very as a of larger we billion, numbers $X about over portion in There’s very, the IGP. period and million, a significant, that’s long $XX

we of are until those guidance So have that going developed long-term plans sort preliminary investment again, for It’s in opportunity give. forward. us more That’s a numbers, the the can these detail. we the very

that I’ll that $X side, to, generation This that scale through and XXXX XXXX. already billion, that in now, the will amount Paul the over Kimura. RFP. Oahu right to RFP be procurement after in that the Shelee the going putting we’re or be on Maui of bid is because just for And process happen And any add of in Leon. million the details or $XX those more the we’re I’ll we would provided competitive bids discussing put just for we on not add either numbers a

post what awards to to fair I translate on we’ll that quarter, speak formal Is assume No, It’s that would update a here dollars you get Yes. in understand. difficult next and today. the to timing? it exactly to

Yes.

RFP, will out Oahu the October. the for come So in results

time. results would point. able Maui So talk be we about that at at for that the we have RFP, that the to won’t

Alright, guys. you. you, Thank thank

with from Associates. question Our Glenrock is Patterson next Paul

line open. Your is now

Hey, good morning.

Paul. Hi,

Hi. me? hear you Can

bank just if So are competition correct? quarter. if of looking seeing more previously heard the than Is it I it, the you in that I for last were and interest that sounds – higher here. guys items The rates me from you on a I did to that customers couple correctly, it apologize

Paul. No,

compared forecast. seeing what to we’re previous is our think I

interest the rate forecast anticipated. obviously, we higher than So is previously had

So one that’s driver.

dug seeing bit the what are shift we is more of what – and and there We seeing but of we’re did And out. half mix the going year. for down actually probably deposits we terms a little lot seeing a also a a we’re changes deposit was lot in deposits majority a what saw we first in, more coming or

spending. to net a there’s So outflow consumer related

other in daily environment. words, depositors of expenses on living higher because spending the more of sort So inflationary

bank. rates, what we’re seeing new we’ve banks higher to is mentioned of – this into advantage before, But seeing requires it the order Now market, migration your CDs. competition, data, that expect is stays alternatives all the money to continue are are on terms a competing question we elevated. we Hawaii in to did think on the certain some I new And and right, higher-yielding environment the in if take of that in as the we rate banking in level of money local coming

are more a that’s seeing where competition. so bit And little we

mean higher the rate don’t is unexpected thing given Yes. that I I environment, And say Paul, think interest are this all other banks was competing. the the I would right.

deposits the I to time-based that think – see We core from of anticipated. starting was to CDs. that’s And bit are shift little a

funds peers. cost our attractive overall Our total of compared very to still remains

not I guess And Treasury apologize this am go net speaking the question, as from Okay. into just was I now not when you, rate what I given is saying? more risk we about the into guess going a from And for XXXX, sources, whether market. am have what online in I interest is, meant environment Hawaiian quarter-after-quarter am guess of I what Direct this all I I or if wondering Julian’s context to I the clearly. I banking, interest back competition, follow there wondering, guess margin, further talking rollover deterioration I you to and just

that. Bank to Yes, going on bit President, a to Paul, comment Ann I am Teranishi, our ask little

in a though general, are see moderation expand. you is Anne, what I on starting to impacts think we of but can maybe NIM,

Yes.

in quarter-over-quarter. answer I been increased successful we And hasn’t seeing competition think success customers CD the Paul, commercial quite our some second has are changed from think well. from some we your initial and there in some with quarter retail had deposit new question I expand the competition, as in been of being about new able to have and bringing well customers, deposit our as as to campaigns money, great existing base

in we is the what half preliminarily appropriate are as well revised and as as what we second well. seen six that tracking – seeing first we feeling So, seeing months to in NIM are we what have are the the

what guys we the I and he annualized Julien think months, how annualized months, the was that? Would about guess what be think saying, do and net rate new And interest for the just guess you now guess four asking, this, the interest I two-third, basically that? should next what or am clear it margin about we I if and engineered, I reverse was had guess. about be starting XX But suggesting could it rate, I be out, average six for is the how ago I how now, is but margin. see or I you looking next at it was we from believe to the net what months the

Yes.

are pricing well the really XXXX. surgical new able is on to is The how managing as originate we in we just how we of creating being guidance apply cost funds we structuring NIM full for the are and as and pressure we we how very loans. are pricing loans, XXXX, to So, and some not comment the NIM, are that,

being So, all carefully managed. very that’s

here. I be am I clear on Yes. trying And Paul, to answer my think

the is right. $XXX to year full the So, $XXX XXXX, for range

$XXX. $XXX remainder we we full that. where are is Our fairly $XXX. our And the QX the $XXX. that – that’s QX as was project our That’s estimating throughout the year, range. are confident And of to in was we them

appreciate it. I Okay. much. Thanks so

question Jonathan Fargo. next Our with is Reeder from Wells

Your line open. is now

you Hey, can guys okay? hear me

Yes. Hi, Jonathan.

How are guys? you

Good.

seems to wholesale I higher like guess I well more do degree? to as limit end utility I with that’s us, that’s for on like something the a dedicated controllable But guess might eliminate your funding, what even some bank you or it continue like can question. folks

trends deposit relatively we down seeing of In environment, Yes. in flat. that deposit what deposits funding, can pay this or growth. Jonathan, whether current terms are we wholesale really right, the is drives

is, those the of down year. And so pay not expecting we to being the wholesale for that – are that able fund balance

But thing of loan factor the other cash is portfolio from growth, that our that. sort the The off down other flow of loan the that portfolio, pay right. is offsetting and drives investment

sort there So, then determine things and – cash cost we not would are or of those any cash we And first. have to we this not pay if down wholesale there balance higher of three year. flow, to But significant amount the highest terms is sources expecting pay specific we is meaningful excess flow? cost a down are growth, of expecting funding to that excess of growth loan all deposit funding, for funding in

Okay.

the digit just wholesale there mean I still having, I low-single growth? I book worth saying guess that’s like that is in if loans opinion, still versus versus So, keep in worth that a – funding your let’s it it’s loan balance your to, out flat order guess that still grow trade-off

Yes.

pricing I just interest think also higher the environment issued is the are are rate being rate. funding rates, at mean at yes, I fact or we that a that higher loans in, but given – our current

NIM, bit to So, but is little accretive a to NII. non-accretive it

Yes. we And in issuing. of we are Jonathan, the is loans the being very careful other terms are thing, that

by for at the the different factors. all of same are still We have are our customers funding. book we in these loan in balancing it growing time, recognized a But we selective terms again, how fairly that need being there because is

Sure.

That Holdco sense. interest at was the driving parent? missed just but makes that what revision higher it, of drag, expense in Okay. I the was kind

No, related this to Current. Pacific was

down We their issues some There were are of in equipment resulting one that lower a largely That’s at of plant the bit little performance projects. year continued this a expecting being for resolved. time. been bit little

for expecting loss – So in year, or that. are higher full little lower the related bit to a net but we effect

Okay.

hopefully that So, bounces be outage? I that guess in should something back that, not ‘XX, having

Yes, correct.

you that Is on approving question the last that actually me, forward so, to for IGP? what’s roadmap an and something timeline on IGP. the commission then And then like that move approval with process if Okay. up to sets CapEx? like Julian’s definitive a for And following HPUC’s the follow for approves the

This is Shelee.

waiting approval. filed IGP for was PUC So, the or

is T&D question to master broader require to of filing a separate based be of IGP. would plan that for IGP, the investments final we issue the in steps plan your file to are we file the builds RFP about kind our that next term, hope can of it in Our in respect longer draft the RFP request approval the of program, that off XXXX. to but the a that March And With September. would

Okay.

forward and commission ways their IGP, these guess you have to just does the the give actually, costs? I of moving definitively setting projects So, maybe other but blessing

that Yes, And would right. also PBR, to have recovery. like that’s add our cost reminder, we a under I just

inflationary we of each level into already the and built some is the CapEx there increases So, get that’s year. PBR

Right.

Great. Thanks my taking question for today. Okay.

You’re welcome.

Our with is next Verition Ashar from Khan Fund. question

open. Your line is now

you ROE it be just of so related, guidance. How down What expected earnings you then from much is factors, one the are Hi. now help down? is the you How which guidance? question, the are to us in could the are $X.XX how factors a quarter what doing, ask the NIM to down break bank $X.XX? can break are I or it much Can lead drop it to related, to

essentially right. is the the Really, Yes. driver NIM,

mix significantly we that So, because higher rate expense and of interest the our forecasting. that previously increased environment, were shift interest

balance in quarter a modestly whereas year. the Again, deposits to much And shift mix shift weren’t for of mix total deposit our be so expecting to first – that given we of we resulted the up, a expecting continued as our our compression were large guidance and flat now incorporates NII. forecast, in

just would too. like I add, to And Yes.

to banks the of like peers think want is managing we all just [indiscernible] experiencing our though, highlight similar pressure. So, more our I And while cost NIM have it fund XX%. in NIM the change are quarter-over-quarter XX for average with been guidance, just I was compression

what year. the think just it be for know But shift I to deposit we impact on deposits. of managing upfront we funds the and managing pricing cost the are in with remainder our closely of pretty in think be So, will trying that are very that we

down if points went quarters. by basis So, assume between about just right, that assumption NIM two am XX can I the like right, the I

equivalent points the is to the that $X.XX. Is right basis XX So, sensitivity?

Yes.

There of So, thinking about generally their am banks so total costs, costs We core change. our costs. right. are point was – different total the refer XX I funding quarter in and terms talk a basis funding costs – to funding about sometimes for funding our total

But you I the will think it our maybe from haven’t, we of In first can full terms I guidance that take what new guidance of given the guidance. NIM change the be. versus guess in year, our quarter

mean the the essentially moving So, XXX. XXX But down really drivers terms be XXX, to to I the that of – in from NIM. to would XXX down is

is look your sort earning think that you whether if what the mean could at our question NIM, the have in assets I assume So, I do that can you what be of change and then you would to and is take expect.

enough. whether to or as equals for earnings to is Yes. up XX what – year. NIM or this am on is this would pressure, good things year one see impact a points play to points further is and the Okay. go I down next Fair to use basis basis the XX there just out if benchmark trying if be

you think I – ahead. go Again,

ahead Go Ashar.

And cash have not flow my your so see slides final changed. question is, I

you million tax. after I earnings about we – so are $XX can So, ask in losing $XX million or

how exactly as is same in the as is that where absorbed that – the one. flow being quarter is So, cash

your replace So, in for that flow what projections to is the in lost year? earnings cash coming

Yes.

assume you size the holding cash Yes, to I dividend balance company. based growth the leverage sheet is impact. dividends talking from are the also to ratio but balance flow the to of some holding X the has about the size extent, we the ratio an company the way the is Ashar, bank Tier on leverage sheet contraction also X or and Tier earnings affected by bank’s

So, based set earnings come we for able earlier on our leverage, based on the even that dividend outlook are year. have outlook, manage Tier to the still our though in down, but we X

Okay.

information? of So, just follow-up have dividend What that is at dividend can Tier the X? maximum manage that to bank? is maximum you get you can is bank to the I what just is from tar that I the the what that you out are, What that the is out can can – that

between we X to our ratio Tier So, X.X% to leverage manage X%. be

that I of maximum terms in number In don’t exact front dividend, have the me. of

But not sort of at leverage our the the be company. our on for dividend subsidiaries dividends XX-K, to in that at X.XX% of were up end we from touch amount think our X restricted the able the Tier I ratio. of we quarter, are holding to

go to can down you And Okay. X.X%.

to to range I right? said You am the X.X% was X%, correct,

to manage but leverage X like our Technically, we think ratio I conservatively. Tier

dividend to But necessarily So, we stay try to decision to maximum generally amount a wouldn’t to make the X.X% to X.X%. down within the we X% get range. that

much. Okay. Thank you so

are questions. no more There

will I over Scott So, remarks. pass to for the back call closing Seu

reliable performance today. again solid look efficiency at forward supported the of results, to and another stability joining to our thank So, for quarter our want I We everybody by of us just companies.

So, everybody. thank you

for participation. That Thank your concludes you the conference call.

your disconnect lines. now may You