First Hawaiian Inc . (Ticker: NASDAQ:FHB) has reported a solid financial performance in the first quarter of 2024, with a net income of $54.3 million, or $0.42 per share. The bank achieved a return on average tangible assets of 0.94% and a return on average tangible common equity of 14.53%. A notable increase in net interest income and strategic balance sheet optimization were key contributors to this quarter's results.
Key Takeaways
- First Hawaiian Inc. reported a net income of $54.3 million, or $0.42 per share, in Q1 2024.
- Net interest income rose by $2.6 million due to net interest margin expansion.
- The bank sold $526 million in investment securities and paid down $470 million in higher-cost public time deposits.
- Loans and leases stood at $14.3 billion at period-end, with construction loans up by $72 million.
- Deposit balances decreased by $663 million, largely from a reduction in public time deposits.
- Non-interest income was reported at $51.4 million, while non-interest expenses totaled $128.8 million.
- A $6.3 million provision for credit losses was recorded, reflecting modest credit quality deterioration.
- The bank is focusing on acquiring new checking accounts and increasing non-interest bearing deposits.
- They expect net interest margin expansion from $1.5 billion of fixed-rate loans and $600 million of securities maturing this year.
- The company is contemplating share buybacks after navigating the current uncertain period.
Company Outlook
- Management is keen on acquiring net new checking accounts and gathering non-interest bearing deposits.
- The bank's balance sheet size will be influenced by lending activity, with the possibility of rolling over FHLB borrowing or using deposits for funding.
Bearish Highlights
- Deposit balances saw a significant decline, primarily due to a decrease in public time deposits.
- There is an increase in criticized loans, especially in the multi-family construction sector related to rental and for-sale housing.
- The credit quality of Shared National Credits has weakened, though resolutions are expected.
Bullish Highlights
- Net interest margin is expected to expand with the maturation of fixed-rate loans and securities.
- The bank maintains a strong credit performance with low delinquency metrics.
- There is an anticipated strength in commercial C&I loans, particularly in flooring and commercial real estate.
Misses
- The bank recorded a modest deterioration in credit quality, which was within expectations.
- A 3 basis point impact on loan yields was noted due to timing differences in deferral take-ups.
Q&A Highlights
- The company discussed strategies for managing the balance sheet and credit quality.
- They are considering share repurchases in the latter part of the year.
- Management did not comment on the impact of market competition or a struggling competitor.
- There was a mention of an insurance claim related to a branch fire and the possibility of future claims.
First Hawaiian Inc.'s first quarter of 2024 demonstrates a strong financial position, with strategic balance sheet management and a focus on expanding net interest margins. Although faced with some challenges in credit quality and market competition, the bank is actively managing its portfolio and exploring opportunities for growth and shareholder value enhancement.
InvestingPro Insights
First Hawaiian Inc. (FHB) has shown resilience in its financial performance, and the InvestingPro platform offers additional insights that could be relevant to investors:
InvestingPro Data highlights a market capitalization of $2.79 billion, reflecting the company's substantial size in the financial sector. The P/E ratio, a measure of the company's valuation, stands at 12.58, suggesting that the stock may be reasonably valued compared to earnings.
Moreover, the bank has maintained a dividend yield of 4.75%, which could be attractive to income-focused investors, especially considering the company has maintained dividend payments for 9 consecutive years.
InvestingPro Tips indicate that two analysts have revised their earnings upwards for the upcoming period, signaling potential confidence in the bank's future performance. Moreover, First Hawaiian Inc. has been profitable over the last twelve months and analysts predict the company will continue to be profitable this year. This is coupled with a large price uptick of 26.11% over the last six months, suggesting positive investor sentiment.
For those interested in further analysis and metrics, the InvestingPro platform offers additional tips on First Hawaiian Inc., accessible at https://www.investing.com/pro/FHB. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 11 more InvestingPro Tips available for FHB on the platform, providing a comprehensive view of the company's financial health and market performance.
Full transcript - First Hawaiian Inc (FHB) Q1 2024:
Operator: Good day and thank you for standing by. Welcome to the First Hawaiian Inc. Q1 2024 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Kevin Haseyama, Investor Relations Manager. Please go ahead.
Kevin Haseyama: Thank you, Tanya. And thank you everyone for joining us as we review our financial results for the First Quarter of 2024. With me today are Bob Harrison, Chairman, President, and CEO; Jamie Moses, Chief Financial Officer, and Lea Nakamura, Chief Risk Officer. We have prepared a slide presentation that we will refer to in our remarks today. The presentation is available for downloading and viewing on our website at fhb.com in the Investor Relations section. During today's call, we will be making forward-looking statements, so please refer to Slide 1 for our Safe Harbor statement. We may also discuss certain non-GAAP financial measures. The appendix to this presentation contains reconciliations of these non-GAAP financial measurements to the most directly comparable GAAP measurements. And now I'll turn the call over to Bob.
Robert Harrison: Good morning, everyone. I'll start with an overview of the local economy. Hawaii economy continues to perform well with the state unemployment rate remaining low, tourism is steady, and the construction industry is healthy. Statewide seasonally adjusted unemployment rate for March was 3.1% compared to the national unemployment rate of 3.8%. The statewide visitor industry is continuing to recover faster than expected following the Maui wildfires, but still remains slightly below 2023 levels. The legislative session is wrapping up, and additional funding was secured for the Hawaii Tourism Authority, and a new marketing campaign was announced a couple days ago, so things are looking up to that. Through February, total visitor arrivals were down 0.6% and spending was down 1.9% compared to 2023 levels. That was primarily due to declines on Maui. Excluding Maui, arrivals and spending were above 2023 levels. Growth in international visitors have helped offset declining visitors from the U.S. Mainland, with increases in Japanese visitors making up most of the increase in the international arrivals. The housing market is relatively stable despite reduced activity levels. In March, the median sales price for a single family home on Oahu was $1.1 million, a 1.5% higher than 2023. The median sales price for condos on Oahu was $500,000, 6.7% below the previous year. Turning to Slide 2, I'll go over the highlights of our first quarter financial performance. We started the year with a solid quarter. Net income was $54.3 million or $0.42 per share. The return on average tangible assets was 0.94%. And the return on average tangible common equity was 14.53%. As expected, the net interest margin expanded in the first quarter, this drove a $2.6 million increase in net interest income versus the prior quarter. Turning to Slide 3, We continue to execute the balance sheet optimization that started in the fourth quarter with the sale of $526 million of investment securities. During the first quarter, we used those proceeds to pay down about $470 million of higher cost public time deposits. The duration of the investment portfolio increased slightly in Q1, as a result of the security sale during the prior quarter. Our balance sheet strength continued to increase as we grew capital levels and have ample liquidity. Turning to Slide 4, period-end loans and leases were $14.3 billion, about $33 million lower than December 31st. Line draws for ongoing construction projects drove the $72 million increase in construction loans. We did continue to face headwinds due to the slowdown of residential real estate market and the continued run-off in the indirect auto portfolio. We still believe that loan demand will pick up in the second half of the year and that full year growth will be in the low-single digit range. Now I'll turn it over to Jamie.
James Moses: Thanks, Bob, and good morning, everyone. Turning to Slide 5, total deposit balances declined by $663 million, primarily due to the $470 million decrease in public time deposits. The decrease in public costs -- sorry, excuse me -- in higher cost public time was intentional and was part of the overall balance sheet actions that we announced on our last call. Retail deposits increased by $142 million in the first quarter, and that was offset by a $355 million decline in commercial deposits. The drop in commercial deposits was primarily due to normal fluctuations in a few large commercial accounts, as well as about $170 million of insurance payments related to the Maui wildfires. The non-interest-bearing deposit ratio was 34% at the end of the quarter. The rate of increase in deposit costs continued to slow down in the first quarter. Our total cost of deposits for the quarter was 165 basis points, a 9 basis point increase from the prior quarter. Turning to Slide 6, net interest income increased $2.6 million from the prior quarter to $154.4 million, and our reported net interest margin increased by 10 basis points to 2.91%. We had a non-recurring interest income related to the recognition of interest on deferred loans tied to the Maui wildfires that added about $1.5 million to interest income and 3 basis points to the margin in the first quarter. The spot NIM in March was 2.87% and we are projecting the NIM in the second quarter to be about 2.89%. We do expect that the NIM will increase about 1 to 2 basis points per quarter for the remainder of the year. Through the end of the first quarter, the cumulative betas were 46.5% on interest-bearing deposits and 30.2% on total deposits. Turning to Slide 7, non-interest income was $51.4 million, $7 million less than the prior quarter. We had about $2 million of non-recurring income in Q2, excuse me -- in Q1 as a result of insurance proceeds we received for losses we incurred during the Lahaina wildfires. We continue to expect quarterly non-interest income to be in the $49 million to $50 million range. Non-interest expenses were $128.8 million in the first quarter and included a $4.1 million FDIC special assessment. Excluding that special assessment, expenses were in line with our expectations and we continue to expect full year expenses to be around $500 million. Now I'll turn it over to Lea.
Lea Nakamura: Thank you, Jamie. Moving to Slide 8, the bank maintained its strong credit performance and healthy credit metrics in the first quarter. While we have seen some modest deterioration in credit quality, our experience so far is well within our expectations. We are not observing any broad signs of weakness across either the consumer or commercial loan books, and we have more than sufficient loan loss coverage. Classified assets increased by $64.3 million, driven by several downgraded credits. This caused the ratio of classified assets to total loans and leases to increase by 45 basis points to 64 basis points of total loans and leases. Of that $64.3 million increase, $24.4 million was paid-off in full after the end of the first quarter. Year-to-date net charge-offs were $3.8 million. Our annualized year-to-date net charge-off rate was 11 basis points, 2 basis points higher than in the fourth quarter. Non-performing assets and loans past due 90 days or more [were] (ph) 15 basis points of total loans and leases at the end of the first quarter, unchanged from the prior quarter. And finally, the bank recorded a $6.3 million provision in the first quarter. Moving to Slide 9, we show our first quarter allowance for credit losses broken out by disclosure segment. The asset ACL increased by $3.3 million to $159.8 million with coverage rising 3 basis points to 1.12% of total loans and leases. The ACL continues to include a reserve for the potential impact of the Maui wildfires. This estimate includes the potential impact to borrowers located both inside and outside of the fire zones, as well as any insurance coverage. Turning to Slide 10, we provide an updated snapshot of our commercial real estate exposure. CRE represents approximately 30% of our total loans and leases. Credit quality remains strong, with LTVs manageable and criticized loans continuing to comprise a very small portion of the portfolio. Let me now turn the call back to Bob for any closing remarks.
Robert Harrison: Thank you, Jamie. Thank you, Lea. We'd welcome any questions that you would have.
Operator: [Operator Instructions] And our first question will come from David Feaster of Raymond James, your line is open.
David Feaster: Hi, good morning everybody.
Robert Harrison: How are you David?
David Feaster: Doing great. Maybe just touching on the margin side a bit. I appreciate all the color that you guys gave. But I mean, really like the key driver to the margin is going to be deposit performance right, especially on the NIB front. I'm curious if you could help us maybe think through how the NIB balances trended throughout the quarter? And just any thoughts on overall core deposits growth in the initiatives that you have got in place from that perspective. Just curious kind of on the deposit side, how you think, things play out.
James Moses: Yeah, thanks Dave. It's Jamie. In terms of one part of your question, right, which was sort of performance throughout the quarter, most of the non-interest bearing decline that we saw that happened in January and February, moderated quite a bit in March. But our guide forward does include some continued non-interest bearing movement from – again from NIB into interest-bearing deposit accounts. And I think, you kind of nailed the forward NIM expectation as well, right? That is -- that's going to be kind of entirely driven by how that performance -- about how that migration happens throughout the year. So we -- in our modeling right, with our guidance -- that implies some decrease from Q1 into Q2 continued moderation in Q3 and continued moderation in Q4. So that's kind of what the basis for our NIM guidance is. And then as it relates to deposit gathering initiatives, I think we’re really continue to be focused on generating net new checking accounts is really where the focus is. We have -- our securities portfolio continues to run-off. We are going to continue to do that. So our need to grow deposits has moderated a little bit because of that. And with our loan growth guidance in sort of the low single-digit area, the need to really be hypercompetitive and go out and gather new money market accounts or newer CDs and things like that. It is kind of – I’d say, we [have this] (ph) -- moderate need for those things. So we are really focused on net new checking accounts. And then the second part of that in terms of deposits really comes down to our relationships, right? And so we want to make sure that we continue to be there for our customers in the way that they need us to be. So to the extent that -- there are more deposit customers that have some rate sensitivity, we will respond to that with them. And to the extent that we can gather more non-interest bearing deposits, obviously we would like that as well.
Robert Harrison: And David, this is Bob. Maybe just to add to Jamie's comments, which are spot on is just to remember from the call last quarter -- last quarter's call that this year, we have about $1.5 billion of fixed rate loans rolling over and $600 million of securities. So that is -- what's really helping drive that NIM expansion throughout the year. You can't exactly predict what's going to happen with deposits to Jamie's point, but that we do know -- that those will reset and the securities will mature.
David Feaster: And that kind of feeds right into my next question. That is a really good point. You guys are – look -- you're naturally rate sensitive just given the strength of your deposit base, right? And you've been active managing the balance sheet with the securities book and all that. I'm curious, how do you think about managing the balance sheet today, right? The rate outlook continues to change pretty rapidly. Once again, everybody is worried about rate cuts and now we are talking about a higher for longer environment. But I'm just curious, how do you think about managing the balance sheet at this point, just kind of given that uncertainty on the rate front? And anything that you guys are considering at this point?
James Moses: It's a great question, Dave. I think the way that I'm kind of thinking about it right now is that we have the securities portfolio, it is [yielding 230] (ph) or somewhere in that neighborhood. On the margins, we are funding that with 5% higher cost deposits. And so, at the moment, we are kind of waiting, biding our time, I would say, right? We are kind of just managing through that natural grind. We feel really good about the cash flows of that portfolio. They were structured in such a way so that it wouldn't extend or contract too much given a different rate environment. So what we are really focused on is helping our customers, being there for our customers to the extent that there is loan growth opportunities with our customers, we want to be there for that. And in the meantime, we are really thinking about the overall balance sheet kind of on the margins and the securities portfolio. That is going to continue to run off. and we’ll fill in the gaps, where we need on the funding side with public time deposits, if that's required. I don’t -- So we're not really thinking about hedging anything at this point. We feel pretty good about where we are at, even in a down rate scenario, say, 100 basis points down, 200 basis points down, that is still a net positive action with replacing securities portfolio and running off the time deposits. So we also have an FHLB borrowing that is going to mature in the third quarter. So there is a lot of sort of moving parts there. But at the moment, I think we are comfortable with the balance sheet. We like the way we are doing it. As you say, rate outlooks change intraday even today, right? So we’re really trying to just be focused on our customers. and just grinding through this sort of odd mix at the moment with the securities portfolio and the marginal higher cost of funds.
David Feaster: That's extremely helpful. Could you remind us the size of that upcoming maturity and the rate on it?
James Moses: The FHLB, it's $500 million. It's going to mature in September 1, and it is -- I think it's at a [$490 million rate] (ph).
David Feaster: Okay. Perfect. And then just last one for me. Look, you guys touched on credit broadly. And you feel like you are well-covered, talked about some downgrades that you saw in the book? I mean non-accruals held steady and it's benign. Talked about some downgrades. I was curious what drove those? And maybe just your thoughts more broadly on credit what you are seeing, what you are watching closely? And just any thoughts even on CRE, just kind of given the market hyper focus on that segment?
Robert Harrison: Dave this is Bob, I'll start maybe and hand it over to Lea. It's a really interesting quarter other than handful of downgrades as she can speak to better. Really across the board, we stayed the same or got better on every other metric, where delinquencies for NPAs, et cetera. So we aren't seeing any signs, it's something we pride ourselves on is being very thoughtful about supporting borrowers and making sure that they can -- they had the ability to pay us back, but it's not unusual for this part of the cycle to see a little bit of weakness in a handful of names. So with that, Dave, I'll hand it over to Lea.
Lea Nakamura: I don't really have much to add other than our metrics -- our delinquency metrics start at a very low base. So it doesn't take much for it to pop. And we -- we are staying close to the borrowers that we think are a little bit under duress, and we talk to them constantly. We understand what the projects are. We are actually quite comfortable even with that loan that we mentioned that we paid off. We actually were very comfortable with the loan. There are circumstances that require us to categorize it a certain way. But I think, fundamentally the portfolio is actually quite strong.
David Feaster: Terrific, thanks everybody for all the color.
Operator: [Operator Instructions] And our next question will be coming from Steven Alexopoulos of JPMorgan. Your line is open.
Steven Alexopoulos: Hi everybody.
Robert Harrison: Hi, Steve.
Steven Alexopoulos: I want to start -- so Jamie, you just indicated on the non-interest bearing. I thought you said that trends moderated in March. I'm not sure exactly what you mean by it. Do you mean that you still saw outflows in March, but not to the degree of January, February. And I say that because the period end non-interest bearing deposit balances were, I think, it was $200 million or so below the average. So your period-end was down fairly materially.
James Moses: Yes. That's right. So I mean, I think the right way to think about it is most of that outflow happened in January and February. And then in March, it was pretty much flat.
Steven Alexopoulos: It was flattish in March, okay. Got it. And you are assuming flattish. Is that what you are assuming for the rest of the year?
James Moses: No. Actually, that 1 basis point to 2 basis point guide would assume that, say, we were $500 million down, say, in the first quarter that, that sort of moderates down to flat by the end of the year.
Steven Alexopoulos: Got it. Okay. What about the public time? What's your thinking on that for the rest of the year because those continue to come down too?
James Moses: Yes, we think that we are going to be able to bring that down in-line with the size of the balance sheet. Hopefully, we have -- hopefully, that non-interest bearing moderation that we are talking about, hopefully that slows down even more, which would allow us to pay even -- pay down more of those public time deposits. So at the moment, we think that's going to come down, then there is going to be a need for a little bit of funding in September with the FHLB borrowings. And so we'll kind of -- we're going to -- we'll manage that on sort of like what's best for us in terms of financials, right, around the rate on those things. So it is possible that the public time increases in Q3 with the paydown of the FHLBs or it's possible maybe we'll find some other borrowing source that maybe makes a little more sense economically for us at that time. So the public time really is going to be a function of the extent of the loan growth that we have and the other deposits either growth or declines that we have.
Steven Alexopoulos: Okay. That's helpful. And actually I was going to ask on the loan growth. Quite a few banks were fairly optimistic with the pipeline. They didn't have a lot of growth this quarter, but they were more optimistic. What are you guys seeing on the pipeline? I'm talking more commercial C&I pipeline.
Robert Harrison: Sure. Steve this is Bob. So we expect -- flooring came down a little bit this quarter, not unusual to have it pop up at year-end and come down in Q1. So we think that'll have some strength to it. You're seeing production levels at much higher levels through most manufacturers, some of the foreign brands in particular, Toyota (NYSE:TM) has been challenged. Although, I'm sure they'll be catching up by year-end. So that's one area. We are seeing still some deal flow from the commercial real estate side and in particular deals that we put on a year ago that, of course on the construction side, the equity money goes in first, and then you start with the draws. And so we saw that strength in this quarter and we think that will continue to be some strength. And we are seeing slightly better pricing in the indirect world as well. And so we think the decline in that portfolio will start to moderate, and we'll see where that goes. If it makes sense, we want to do that business and it's good business. We know it extremely well. just the economics for a while just didn't make sense for us. So I think really those areas -- one area that we are not forecasting any real recovery in residential. We hope it gets better, but that's just a hope that's not a forecast. So we're going to just watch that and be it for our customers as needed. But hard to see a lot of uptick in residential in the back half of this year.
Steven Alexopoulos: Got it. And Bob, if I can ask one other one, just on capital, you continue to accrete capital pretty nicely here. What are you thinking of from a share buyback perspective, right? Because your credit quality overall is pristine. And you're not using capital to grow the balance sheet. So it seems like you're just going to continue to accrete capital. How do you think about returning some of that to shareholders?
James Moses: And a great question, and we have the authorization to do that. I think the only thing we're looking at now, one, as we've talked about previously, we want to get through that uncertainty period of what happened a year ago with SVB and just a lot of questions out there in the market. So I feel that we are past that. So that's the good news -- is the most important thing. Our ratio of across the board, not just common equity Tier 1, but all the other ratios have improved to a point where that is off the table, and I think most people's minds. And then the second one is there is a remixing and this is what we are watching as we remix the balance sheet out of securities and into loans, obviously, a much higher capital rate going up from 20% to 100%. So it really is looking at that. And then if not this quarter, certainly in the back half of the year, we'll be looking closely at that and decide when and if a share repurchase actually putting -- starting to using share repurchase makes sense. But that is more likely in the back half of the year.
Steven Alexopoulos: Got. It’s more to come. Okay, thanks for taking my questions.
James Moses: You’re welcome.
Operator: And our next question will be coming from Timur Braziler of Wells Fargo. Your line is open.
Timur Braziler: Hi, good morning. Maybe -- circling back on just balance sheet size. So I get your commentary on continued paydowns of the public funds. And then with the FHLB borrowing that's coming due in September, the expectation there or the willingness there to pay that off or roll that into new borrowings? And I guess just more broadly, is there an outcome where the balance sheet growth kind of in the next couple of quarters? Or do you really need to see some pickup on the lending activity before we should start to see the balance sheet actually expand?
James Moses: Yes. Hi, Timur. It’s Jamie. I mean -- I think the last comment you made is probably the right one there, right which is the size of the balance sheet is really going to be mostly dependent upon what we do on the lending side. I feel pretty comfortable for the time being about the securities portfolio and the runoff associated with that. So yes, I think the size of the balance sheet will be sort of dictated on the lending side because that cash flow is pretty certain on the security side. The other part of your question, FHLB borrowings, yeah -- so there is a chance that we roll that over, if needed in September. There is also other opportunities in either the public CD market or even in our retail CD market. So at that point, it's going to be kind of dependent upon the economics of what we see potentially, there are potential reasons to either roll that over or to do public time deposits at that time. So we'll think through that for sure.
Timur Braziler: Okay, thanks. And then circling back on credit. It looks like a large portion of the increase in the criticized loans in the multi-family construction, and you have a footnote in here saying that it's centered around rental and for-sale housing. I guess just maybe more broadly, what occurred in that portfolio? And to what extent is the tourism kind of driving that result? Any kind of additional color you could provide there would be helpful.
Robert Harrison: Hi, Timur, this is Bob. It's -- that loan in particular and you'll see it on Page 16, is multi-family construction. It was a Mainland deal, it's a very strong sponsor. They stepped up to the plate and paid it off. And so that criticized portion there is zero, as of today, to give you an idea. So more broadly in the portfolio, as we have looked at for deals we do onto the mainland, we look first to the sponsor, as well as the agent bank and make sure those two are -- people we want to work with. And not every deal works out exactly as you planned, and you just need to work through some of them. And that's what we did in this case. So more broadly, we are still very comfortable with the strategy. We are still very careful on which markets we go into, which sponsors we work with and which agent banks we want to partner with on that. Does that answer your question?
Timur Braziler: That does, yes. And then maybe just a follow-up there. Just -- can you give us the geography that loan was in? And then maybe just some broader commentary about what you are seeing in the mainland portfolio.
Robert Harrison: Yes. That was in the California market. And again those are the gateway cities we've been talking about for some time ever since we started the strategy, and that is why -- it was able to get refinanced and we got paid off just because of the strength of the project and even there is some weakness in some of those markets, but you have to be very specific about even within some of those gateway cities exactly where you're doing the deal and where the deals being done. And even if the sub-markets are all very important. And building that expertise and being able to execute on that is really what drives a lot of the credit quality as well.
Timur Braziler: Great. Thanks for the questions.
Operator: And our next question will be coming from Jared Shaw of Barclays. Jared, your line is open.
Jared Shaw: Hi, good morning. Thanks. Maybe just first on Maui. What's the remaining expected insurance benefit or payment from outstanding claims? Or is that all tied up with what we saw this quarter?
James Moses: So yes -- so just to be very clear about what that insurance benefit was -- that was insurance on our building on our branch that burn down. And so we had -- that was that insurance claim for this quarter from us. And then on the deposit side, that was claims might be came into the bank that got paid out in the quarter to recipients. So I just want to clarify those two comments. And then if that didn't address your question, then maybe if you could ask it again that we can either Lea or Bob can handle.
Jared Shaw: Yes, I think that's it. So that $2 million that you called out for the branch, there's really no other FHB claims outstanding then -- is the way to think of it?
Lea Nakamura: There will be once we start the actual rebuild.
Robert Harrison: Yes, that will be further out. So -- but that's kind of the initial and then as time goes by, and it's hard to determine when that will happen or specifically the amount at this point in time.
Jared Shaw: Okay, all right. Thanks. And then my follow-up, there's a competitor bank that's been in the news lately with a parent that's struggling a little bit. What's your -- or do you have any thoughts on how that could impact the market? Is that an opportunity for you to either take market share or protect market share? And would you envision situation where potentially a new competitor would come on to the islands and be in the market? Or do you think that this position there would likely involve Hawaii banks?
Robert Harrison: Yeah, we prefer not to speculate on that, and that's very much going to just wait and see how that plays out. So I don't have any comment on that one.
Jared Shaw: Okay, all right. Thanks.
Operator: Our next question will be coming from Andrew Liesch of Piper Sandler. Andrew your line is open.
Andrew Liesch: Thanks everyone. Just one quick question for me. You've covered everything else. You had the balance of shared national credits? And how is the credit quality performing in those right now?
Lea Nakamura: So we do have the balance of Shared National Credit. So we actually divide the portfolio up into credit only versus non-credit only. So the outstanding balance on the credit-only SNCs, at the end of the quarter was $324 million. And how is the credit quality standing up? There is been some weakness admittedly, but we do have expectations for resolutions on those. None of them are on non-accrual or anything. They are just incorporated into our table on Slide 15.
Andrew Liesch: Yeah, that’s really helpful. And thanks, you have covered everything else. I'll step back.
Robert Harrison: Yes, just a little broader context maybe because obviously, the portfolio is much larger, and we have different cuts on it. The first cut is Hawaii-based Shared National Credit, which is mainland based Shared National Credit. And then within the mainland based Shared National Credit is the ones that really have a presence here in Hawaii that we have a broader relationship with. And then there are some that deploy some of our excess capital liquidity. We're credit only as we call it, and that's what Lea was referring to.
Andrew Liesch: Got it. Thank you.
Operator: And our next question will be coming from Kelly Motta of KBW. Your line is open.
Kelly Motta: Hi, thanks so much for the question. I apologize I drop off the call. So I apologize if this has been asked already but in the quarter, there was quite a nice uptick in loan yields. I'm wondering your release did call out a 3 basis point impact, a sort of one-time benefit in margin. Just wondering, if there is any of that in the loan yields that maybe there is non-accrual recoveries or anything that would be helpful when to consider when modeling the margin as we look ahead.
James Moses: Yeah, thanks Kelly. It’s Jamie. That was that 3 basis points that was on the loan side of things, in particular, was in the residential mortgage bucket. And it was related to kind of like timing differences, I’d say, in deferral take-ups related to Maui. And so we kind of had some catch-up interest that happened in Q1. That was about $1.5 million. So that was like a non-recurring piece of that in Q1.
Kelly Motta: Got it. That’s helpful. I’m going – I’ll step back. Thank you so much.
Operator: And I would now like to turn the conference back to Kevin Haseyama for closing remarks.
Kevin Haseyama: Thank you Tania. We appreciate your interest in First Hawaiian. Please feel free to contact me if you have any additional questions. Thanks again for joining us, and have a good weekend.
Operator: And this concludes today's conference call. Thank you for participating. You may now disconnect.
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