First Hawaiian Q4 2024 Earnings Report

First Hawaiian EPS Results

• Actual EPS: $0.41
• Consensus EPS: $0.40
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.37

First Hawaiian Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $203.83 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

First Hawaiian Announcement Details

• Quarter: Q4 2024
• Date: 1/31/2025
• Time: Before Market Opens
• Conference Call Date: Friday, January 31, 2025
• Conference Call Time: 1:00PM ET

First Hawaiian (NASDAQ:FHB) operates as a bank holding company for First Hawaiian Bank that provides a range of banking products and services to consumer and commercial customers in the United States. It operates in three segments: Retail Banking, Commercial Banking, and Treasury and Other. The company offers various deposit products, including checking, savings, and time deposit accounts, and other deposit accounts. It also provides residential and commercial mortgage loans, home equity lines of credit and loans, automobile loans and leases, secured and unsecured lines of credit, installment loans, small business loans and leases, and construction lending, as well as commercial lease and auto dealer financing. In addition, the company offers wealth management, personal installment, individual investment and financial planning, insurance protection, trust and estate, private banking, investment management, retirement planning, and merchant processing services, as well as consumer and commercial credit cards. The company was formerly known as BancWest Corporation and changed its name to First Hawaiian, Inc. in April 2016. First Hawaiian, Inc. was founded in 1858 and is headquartered in Honolulu, Hawaii.

First Hawaiian Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Thank you for standing by, and welcome to the First Hawaiian Bank's 4th Quarter 20 24 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 As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Kevin Hasyama, Investor Relations Manager. Please go ahead, sir.

[Kevin Haseyama, Strategic Planning & Investor Relations Manager at First Hawaiian]

Thank you, Jonathan, and thank you everyone for joining us as we review our financial results for the Q4 of 2024. With me today are Bob Harrison, Chairman, President and CEO Jamie Moses, Chief Financial Officer and Lee 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.

[Kevin Haseyama, Strategic Planning & Investor Relations Manager at First Hawaiian]

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, Chairman of the Board, President & CEO at First Hawaiian]

Thank you, Kevin. I'll start by giving a quick overview of the local economy. Our Hawaii economy continued to expand at a slow pace. The statewide seasonally adjusted unemployment rate remained stable in December at 3% compared to the national average of 4.1%. Through November, total visitor arrivals were down slightly at 0.2% and spending was down 0.8% compared to 2023 levels for the same period.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

The housing market remained stable in December. Median sales price for a single family home on Oahu was $1,100,000 5.8 percent higher than December of 2023. Median sales price for condominiums on Oahu was $540,000 5.9 percent higher than last year. Also want to mention that our hearts go out to all those who are impacted by the wildfires in Los Angeles. We have a lot of customers, employees and friends in Los Angeles area and those are all very important relationships to us.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

Fortunately, all of our employees who are based in Pasadena and their homes are safe. Turning to Slide 2, we have highlights of our 4th quarter results. We finished the year with a strong quarter driven by growth in loans and deposits, an increase in net interest income, excellent credit quality, solid non interest income and well controlled expenses. 1 of our biggest drivers for our strong performance was 8 basis points in NIM expansion driven by favorable deposit mix changes and rate outperformance. During the quarter, we also continued to support our communities with a $1,000,000 contribution to the First Hawaiian Foundation.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

Turning to Slide 3, I'll go over some balance sheet highlights. In the Q4, we executed an investment portfolio restructuring by selling $290,000,000 of securities and using the proceeds to reinvest in a similar amount of securities. That provided a 309 basis point increase in yield. This transaction is expected to increase net interest income by $8,600,000 and net interest margin by 4 basis points in 2025. We recognized a $26,200,000 pre tax loss as a result of the transaction and the estimated impact on the 4th quarter were about $500,000 to net interest income and one basis point to NIM.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

We anticipate that we will continue to use portfolio runoff to fund loan growth. The balance sheet remains well capitalized and we repurchased about 1,500,000 shares in the quarter using our entire $40,000,000 stock authorization for 2024. Our stock purchase authorization for 2025 is $100,000,000 Now turning to Slide 4, loans grew $167,000,000 or 1.2 percent from the prior quarter. Loan growth was driven by large increases in CRE and C and I. Over 90% of the CRE growth in the quarter was loans collateralized by Hawaii properties.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

Also, the C and I growth was primarily driven by Hawaii Companies. Increases in dealer flooring balances added about $33,000,000 to the C and I growth. The strong growth was partially offset by payoffs in the construction loan portfolio as a result of completed projects and early refinancing. Looking forward, we believe that we will have good origination activity in 2025, but expected payoffs in the CRE and construction portfolios will continue to be somewhat of a headwind. As a result, we expect full year loan growth to be in the low to mid single digit range.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

Now I'll turn it over to Jamie.

[James Moses, Vice Chairman & CFO at First Hawaiian]

Thanks, Bob. And turning to Slide 5, we had really good deposit performance from both a balance and rate perspective in the 4th quarter. Total retail and commercial deposits increased by $324,000,000 with retail deposits up $113,000,000 and commercial deposits up $211,000,000 Retail and commercial demand deposits increased by $175,000,000 and the ratio of non interest bearing to total deposits held steady at a robust 34%. Total public deposits declined $230,000,000 which included $100,000,000 decrease in higher cost public time deposits. Deposit pricing in the market remained rational and we were able to manage our rate sensitive deposit costs to closely track the Fed rate cuts during the quarter.

[James Moses, Vice Chairman & CFO at First Hawaiian]

As a result of the growth and favorable shift in mix of deposits and combined with the high deposit beta, our total cost of deposits in the 4th quarter fell by 17 basis points. On Slide 6, we see how the deposit performance benefited net interest income and the margin in the quarter. Net interest income was $158,800,000 a linked quarter increase of $2,100,000 The margin increased 8 basis points linked quarter to 3.03%. The favorable variance to prior guidance reflects both proactive strategic pricing actions we took during the quarter as well as the good deposit gathering performance particularly in demand deposits. Given the current outlook for interest rates across the curve, we expect the margin to continue to expand throughout 2025.

[James Moses, Vice Chairman & CFO at First Hawaiian]

As we've discussed on previous calls, margin expansion will be driven by the underlying fundamentals of the balance sheet. Fixed rate pay downs and maturities in the loan book will be replaced with newly originated loans at higher rates. Additionally, cash flows from the securities portfolio will be used to either fund that loan growth or will allow us to let higher cost funding to exit the balance sheet. As a result, we expect NIM to be 3.06% in the Q1 and if current expectations hold continue to expand at that pace throughout the year. Moving to non interest income and expense on Slide 7.

[James Moses, Vice Chairman & CFO at First Hawaiian]

Non interest income was $29,400,000 which includes the $26,200,000 pre tax loss on the sale of securities from the portfolio restructuring. Excluding that loss, total non interest income would have been 55,600,000 dollars We expect the run rate for non interest income to average around $51,000,000 per quarter in 2025. Expense management is a priority for us and non interest expenses in the 4th quarter were $124,100,000 down about $2,000,000 versus the prior quarter. We expect expenses in 2025 to increase about 2% to around $510,000,000 And now I'll turn it over to Lee.

[Lea Nakamura, Executive VP & Chief Risk Officer of Risk Management Group at First Hawaiian]

Thank you, Jamie. Moving to Slide 8. The bank maintains its strong credit performance and healthy credit metrics in the Q4. Credit risk remains low, stable and well within our expectations. We do not see any broad signs of weakness across either the consumer or commercial books.

[Lea Nakamura, Executive VP & Chief Risk Officer of Risk Management Group at First Hawaiian]

As Bob mentioned, we do have customers in the Los Angeles area. We've done a review and none of the properties securing loans in our portfolio were damaged by the wildfires. Classified assets decreased by $7,500,000 due to paydowns and year to date net charge offs were $13,600,000 Our annual year to date net charge off rate was 10 basis points, mostly unchanged from the Q3. Nonperforming assets and 90 day past due loans were 19 basis points of total loans and leases at the end of the 4th quarter, up 3 basis points from the prior quarter. Moving to Slide 9, we show our 3rd quarter allowance for credit losses broken out by disclosure segments.

[Lea Nakamura, Executive VP & Chief Risk Officer of Risk Management Group at First Hawaiian]

The asset ACL decreased by $3,300,000 to $160,400,000 with coverage decreasing 4 basis points to 111 basis points of total loans and leases. We recorded an $800,000 provision release in the 4th quarter. This was primarily driven by better credit performance in the Maui portfolio. We remain very comfortable with our loan loss coverage levels. Turning to Slide 10, we provide an updated snapshot of our CRE exposure.

[Lea Nakamura, Executive VP & Chief Risk Officer of Risk Management Group at First Hawaiian]

CRE represents approximately 31% of total loans and leases. Credit quality remained strong with LCD's manageable and criticized loans continuing to comprise a very small portion of the portfolio. Let me now turn the call back over to Bob for closing remarks.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

Thank you, Lee. Thank you, Jamie. Now we'd be happy to take any of your questions.

[Operator]

Certainly. Our first question comes from the line of Andrew Liesch from Piper Sandler. Your question please.

[Andrew Liesch, MD & Senior Research Analyst at Piper Sandler Companies]

Thanks. Hi, good morning everyone.

[James Moses, Vice Chairman & CFO at First Hawaiian]

Good morning.

[Andrew Liesch, MD & Senior Research Analyst at Piper Sandler Companies]

Bob, just a question on the loan pipeline and the cadence of the growth. How does it look going into the Q1 and how do you think that will trend throughout the year?

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

Yes. It's a little hard to predict quarter by quarter, but certainly we have a lot of things we're working on both here in Hawaii and in the West Coast. So the pretty optimistic dealer businesses, we saw some growth. And again, that's kind of stabilized at a higher level than we were last year, which is good. Not sure if that's the high point that we'll reach post COVID, but certainly good to see that growth continuing.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

I guess lastly for the consumer residential portfolios, we don't see a lot of growth there and probably given the dynamics of that business still a little bit of a runoff in that portfolio.

[Andrew Liesch, MD & Senior Research Analyst at Piper Sandler Companies]

Got it. Yes, that makes sense. And the C and I growth that you have locally, is there anything specific you can point to that as far as business development or more willingness to borrow? Or was it just related to a few one off benefits from individual companies?

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

It's really spread over a lot of our companies. Certainly, the larger companies turn in have bigger dollars associated with them, but it was pretty broad based. So, pretty happy with that.

[Andrew Liesch, MD & Senior Research Analyst at Piper Sandler Companies]

Got it. And then just a question on the buyback, obviously very active here in the Q4 and $100,000,000 for this year. How would you expect that to play out? I mean, I would imagine there might be a little bit of price sensitivity, but how would you expect the pace of buybacks to be throughout 2025?

[James Moses, Vice Chairman & CFO at First Hawaiian]

Yes. Andrew, it's Jamie. I think that the way we're thinking about it is just sort of opportunistically around that and probably spread throughout the year. But I think it's going to depend on just a lot of factors, what we think as we enter the year a little bit further, how much loan growth we're going to have and whether or not we can deploy capital in that regard first. So I think it's going to be opportunistic and no real guidance on when and how that might be deployed.

[Andrew Liesch, MD & Senior Research Analyst at Piper Sandler Companies]

Okay. Very helpful. Thanks for taking my questions. I'll step back.

[Operator]

Thank you. And our next question comes from the line of David Fieser from Raymond James. Your question please.

[David Feaster, Director - Banking at Raymond James Financial]

Hey, good morning everybody.

[James Moses, Vice Chairman & CFO at First Hawaiian]

Hi, David.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

Hi, David.

[David Feaster, Director - Banking at Raymond James Financial]

I wanted to start on the deposit side. I mean, golly, your deposit trends were really good. I was just hoping you could give some color on where you're having success? What drove some of that growth? And just the competitive landscape for deposits on the island and just kind of curious what you're seeing on that front?

[James Moses, Vice Chairman & CFO at First Hawaiian]

Yes. I mean the growth trends particularly in DDA were just were really, really good. We're really pleased with it. I think it's a lot of hard work and dedication from the teams in all of our areas. They've done a really great job meeting new customers being out in the community and just doing a great job on developing and fostering relationships, number 1.

[James Moses, Vice Chairman & CFO at First Hawaiian]

Number 2, I think you're starting to see a little bit of the technology investments that we've made in the past, start to bear some fruit there. And I can't promise $175,000,000 of DDA every quarter. But I think it's I think just a lot of the things that we've been doing, right, just being focused on taking care of our customers, being focused on being out in the community and being great stewards for our communities really helps with all of that. So from a growth perspective, I think that the teams really have just done a really great job on that. And so we're really proud of that.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

And Dave, the only thing I would add is it wasn't just a handful of large accounts. It really was very broad based from the consumer all across the rest of our customer base.

[David Feaster, Director - Banking at Raymond James Financial]

That's great. That's great. And how do you think about deposit growth as we look at the New Year? You talked about low growth and low to mid single digits. I'm curious, how do you think about deposit growth or to the extent that you get core deposit growth, maybe we deploy cash flows from the securities book and optimize the deposit base and use securities to fund loan growth?

[David Feaster, Director - Banking at Raymond James Financial]

I'm just kind of curious how you think about some of those dynamics.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

Yes. Maybe I'll start and hand it off to Jamie. Certainly, we're out there working every day to take care of our customers and that's turned into, as Jamie mentioned, very robust deposit growth in the 4th quarter. Hard to predict a recurrence of that quarter by quarter, but the teams are out there and it's really dependent on the economy here in Hawaii. So I think we're optimistic about that.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

What we do with that, 1st of all, would be to deploy it in the loan portfolio. And again, we saw some solid growth in that as we talked about earlier on the call in our remarks and with Andrew. Depending on what happens there, then we give the rest to Jamie and I'll turn it over to him.

[James Moses, Vice Chairman & CFO at First Hawaiian]

Yes. Thanks, Bob. Yes, I think yes, so if we continue to see this type of deposit growth, I would imagine that some of that will then eventually get redeployed back into the securities portfolio. Of course, we're going to be very, very careful thinking through through from an asset liability perspective, where exactly that goes into, what types of durations and things like that. So I would imagine if it comes to that, it'll be relatively short on the curve, but we'll see.

[James Moses, Vice Chairman & CFO at First Hawaiian]

And then I would also expect it to be continue to be in the same types of securities that we currently have, which are overwhelmingly Fannie, Jenny Securities and that type of thing. So hopefully, I've got a big problem for my treasurer on his hands in the back half of the year about deploying some of that capital for him.

[David Feaster, Director - Banking at Raymond James Financial]

Yes. And that's a high quality problem.

[James Moses, Vice Chairman & CFO at First Hawaiian]

Yes.

[David Feaster, Director - Banking at Raymond James Financial]

Just I wanted to touch on the pulse of your clients. You alluded to kind of like a sense of optimism, but I'm curious how demand is trending.

[David Feaster, Director - Banking at Raymond James Financial]

It sounds like demand is fairly steady and the payoffs are kind of the wildcard and the potential headwind to a material acceleration in loan growth. I'm just kind of curious from your perspective how demand is trending. Obviously, the market is kind of there's a lot of hope that demand kind of accelerates over the course of the year. But curious what you're seeing from that perspective and how new origination yields are trending?

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

Yes. And we're seeing a lot of people come off the sidelines. We're just talking about this few days ago. And so there's a lot of equity money coming into look at real estate deals now. Pricing is getting a little bit tighter, but not still very appropriate given the risk parameters.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

So that's encouraging to see. What one of the headwinds is that there wasn't a lot of construction loan origination in 2023 for obvious reasons. And so that's kind of where we're at now. The 2022 deals pay off as we're starting to see some of them early and some of them just as appropriate when the project is completed, there isn't as much right behind it. So that's the headwind we spoke to in the remarks.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

And the good news is we're seeing a lot of activity out there. The challenge is that once on the construction side, once you book it, it does take some time to begin funding. So that's really the nuance to our earlier comments.

[David Feaster, Director - Banking at Raymond James Financial]

Okay. And just one point of clarification. The margin guide you gave, what rate assumptions are you including in that?

[James Moses, Vice Chairman & CFO at First Hawaiian]

Yes, that's the forward curve. So there's 2 rate cuts, 1 in the middle of the year and one towards the back half of the year.

[David Feaster, Director - Banking at Raymond James Financial]

Perfect. Thanks everybody.

[Operator]

Thank you. And our next question comes from the line of Jared Shaw from Barclays. Your question please.

[Jared Shaw, Managing Director at Barclays]

Hey, good morning guys, everybody.

[James Moses, Vice Chairman & CFO at First Hawaiian]

Good morning.

[Jared Shaw, Managing Director at Barclays]

Maybe on the deposit side, what can we expect for interest bearing deposit betas as we move through the year? And where are you expecting the year to end from an IB deposit beta side?

[James Moses, Vice Chairman & CFO at First Hawaiian]

That's a good question, Jared. I think one of the things about the performance that we've had so far on those deposit betas is that from such a low level of deposit cost, cutting rates as much as we have, it means there's less room to cut as we go forward, potentially. And so we're cautious about how we think about the overall level of rates and then compare that to those rate sensitive deposits that we have. I would expect the beta the absolute beta to decline for newer rate cuts that we have just as a function of the math, right? You're just you can only cut rates so far, kind of independent of what the Fed does on that.

[James Moses, Vice Chairman & CFO at First Hawaiian]

So maybe a little bit less for each subsequent decline in rates, Jared, just sort of scale the beta back and down from that.

[Jared Shaw, Managing Director at Barclays]

Okay. And then I'm not sure if actually you may have given this at the recap of the securities restructuring, but what was the portfolio yield at year end versus the average of what you purchased?

[James Moses, Vice Chairman & CFO at First Hawaiian]

Well, so in the as part of the restructure, we picked up about 3 10 basis points on the restructured piece. So about 2% coming off and about 5% coming on. And so our yield on the portfolio is 210 in the quarter and maybe that was just 3, 4 basis points higher in December.

[Jared Shaw, Managing Director at Barclays]

Okay. Okay. So right around there. Great. And then just finally for me, just on the deposit growth and the DDA growth, how much is that a I mean, I'm guessing that's market share gain for the most part of that.

[Jared Shaw, Managing Director at Barclays]

Is there a change in the competitive dynamic on the islands with any of the recent competitive news change? Or what I guess what's the sustainability of some of that maybe market share pickup?

[James Moses, Vice Chairman & CFO at First Hawaiian]

Yes. Hard to say for sure. There could have been a little bit of that in there, but we haven't seen too much, I'll call it, outflows from anywhere else into here. I think it's been again just for the most part just good ground game with the teams. They're just out in the community.

[James Moses, Vice Chairman & CFO at First Hawaiian]

They're just doing a lot for us and they're taking care of their customers. So, yes, I wouldn't read too much into that in terms of market competitiveness or dynamics.

[Jared Shaw, Managing Director at Barclays]

Great. Thank you.

[Operator]

Thank you. And our next question comes from the line of Kelly Motta from KBW. Your question please.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

Hey, good morning. Thanks for the question. I would like to a great margin. I would like to get some clarification about what you're considering for the overall size of the balance sheet. Jamie, it sounds like that's going to be dictated with what you see with deposits.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

But your outlook for continued expansion from here, could you help us out with how you guys are thinking about the overall size of the balance sheet and the potential to take down additional borrowings or higher cost funding and replace it with this core funding? That would be helpful. Thank you.

[James Moses, Vice Chairman & CFO at First Hawaiian]

Yes. So there's I don't know, we have about $150,000,000 or so of what we would call higher cost public time deposits that are still on the books. And we have rate sensitive deposits that stay with us from a customer perspective. I think we it will really depend upon just what kind of core deposit growth we're going to get. That will be that will probably be the determiner of the size of the balance sheet.

[James Moses, Vice Chairman & CFO at First Hawaiian]

We think the investment portfolio is probably going to run down. We've got cash flows about $550,000,000

[James Moses, Vice Chairman & CFO at First Hawaiian]

this

[James Moses, Vice Chairman & CFO at First Hawaiian]

year, we expect. So those are coming off at 2%. So to the extent that we can find better opportunities for that, we'll look to deploy that. But again, that's dependent on deposit growth. And so it's hard to judge at the moment.

[James Moses, Vice Chairman & CFO at First Hawaiian]

It's hard to see the investment portfolio materially growing from where we're at because of the payoffs and cash flows coming off of that. But again, it will depend on what deposits do from an organic perspective.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

Okay. That's helpful. And then, Jamie, can you please I think you said 3.06% margin in the Q1 with a similar expansion. I think that would imply about 3 basis points of expansion in Q1. Is that a good run rate a quarter about 3 basis points of expansion?

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

Is that what you implied by your guide? I'm just trying to put the pieces together here.

[James Moses, Vice Chairman & CFO at First Hawaiian]

Yes. Yes. I think that's about right. I mean, obviously, the farther we get out into the year, the tougher it is to sort of know what where the rate cuts happen and what type of growth in deposits we're seeing that kind of thing. But as of right now, I think a 3 basis point expansion kind of throughout the year, 3 basis points per quarter, that seems about right to me.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

Okay. All right. And I'm assuming you're when you're talking about the size of the balance sheet, any sort of incremental deposit growth would be incremental to NII, but that's not necessarily baked into your outlook here. Is that the right way to think about it?

[James Moses, Vice Chairman & CFO at First Hawaiian]

Yes, that's right. You got it.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

Awesome. Thanks for the clarification. Just on a high level too, there was a notable one of your competitors is out of the electric company. Just wondering if you've seen any kind of change in the competitive dynamics in Hawaii. And I think everybody is very impressed with your ability to get deposit costs down.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

So just wondering from a high level what you guys are seeing?

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

Kelly, this is Bob. Early days obviously, but hasn't even been a month yet or just right out a month and we haven't seen any changes currently.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

Awesome. Thank you so much for that. And then I guess lastly, NPAs remain incredibly low. It seems like a lot of the growth you're seeing too is in Hawaii. If you could just provide an update on the outlook from here for asset quality, if there's anything you're watching more carefully, everything looks really good from an outsider's perspective.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

Yes. Maybe I could comment and ask if she has anything to add. We're closely monitoring certainly all of our CRE and everything else and we're not seeing anything on the horizon that is coming up. It seems stable. Lee, anything you would add to that?

[Lea Nakamura, Executive VP & Chief Risk Officer of Risk Management Group at First Hawaiian]

No. The only thing I would add maybe is we're actually very pleased with the performance of the Maui portfolio. And so credit is performing within our expectations. And so we're very I don't know.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

Yes, we're glad they're doing well.

[Lea Nakamura, Executive VP & Chief Risk Officer of Risk Management Group at First Hawaiian]

Yes.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

And that's what in part helped us on the lower provision actually a small release in Q4. That was a big part of it.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

Great. That's good to hear. I will step back. Thank you for the questions.

[Operator]

Thank you. And our next question comes from the line of Anthony Eleon from JPMorgan. Your question please.

[Anthony Elian, Equity Research Analyst at JP Morgan]

Hi, everyone. Jamie, if we had no rate cuts this year, could you just talk about the impact that would have to the NIM outlook you provided for expansion over the course of this year?

[James Moses, Vice Chairman & CFO at First Hawaiian]

Yes. So I would say you should probably add another basis point or 2 per quarter to that general guide.

[Anthony Elian, Equity Research Analyst at JP Morgan]

Okay. Clear. And then my follow-up, the fee income guidance of $51,000,000 per quarter, I think that's a little bit of a it would imply a little bit of a slowdown than what you've seen in the past couple of quarters. Can you just talk about what areas you expect to slow down? Or is there just level of conservatism baked into that?

[Anthony Elian, Equity Research Analyst at JP Morgan]

Thank you.

[James Moses, Vice Chairman & CFO at First Hawaiian]

Sure. Yes. I mean, we had a number of things throughout the back half of the year this year that sort of worked in our favor from a fee income perspective. We had some insurance proceeds kind of kicked in. We had a little bit extra BOLI income from a death benefit perspective in the back half of the year.

[James Moses, Vice Chairman & CFO at First Hawaiian]

And so there's just kind of a lot of fees kind of went our way, I'll call it, over the past 6 months. And so it's a little bit of a normalization of that. And maybe there is a touch of conservatism built into that as well. So just kind of we'll be updating that obviously as we do every quarter. We'll let you guys know what we see and how we think about it.

[Anthony Elian, Equity Research Analyst at JP Morgan]

Thank you.

[Operator]

Thank you. And our next question comes from the line of Andrew Terrell from Stephens. Your question please.

[Andrew Terrell, Managing Director at Stephens Inc]

Hey, good morning. Good morning.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

Good morning.

[Andrew Terrell, Managing Director at Stephens Inc]

Just most of my word addressed already. I did have a quick around just the securities restructuring in the quarter and really going forward, when you've got quite a lot of cash flow coming up over the next year off of the bond book, your loan growth is accelerating. Any need or kind of interest or appetite in any further repositioning transactions? And then how do you compare that from an earn back standpoint relative to the buyback?

[James Moses, Vice Chairman & CFO at First Hawaiian]

Yes. Good question, Andrew. We will always be considering things, I guess, right? I wouldn't say no, but it will be something that is in the consideration set as we go forward. And we will the way that we'll look at it is in some ways comparable to the buyback.

[James Moses, Vice Chairman & CFO at First Hawaiian]

But in other ways, it's not really apples to apples in our mind around those things. So I wouldn't say we would not do a securities reposition, but seems unlikely in the short term for sure. And we'll see how it goes. And of course, we'll keep sort of opportunistically looking at share buybacks throughout the year. And we'll just kind of it's tough to give a guide on it.

[James Moses, Vice Chairman & CFO at First Hawaiian]

We're always looking at ways to sort of give our shareholders a return and we continue to evaluate what the best opportunities for that are.

[Andrew Terrell, Managing Director at Stephens Inc]

Okay. Understood. I appreciate it. And then, if I could just ask one more. Bob, I think you mentioned maybe some heavier payoffs weighing on what is otherwise, it sounds like pretty solid origination efforts.

[Andrew Terrell, Managing Director at Stephens Inc]

I'm just curious if you could provide maybe some color on do you have line of sight into that payoff pressure and whether it's more front end loaded? I'm just trying to get a sense of whether your loan growth guidance for that low to mid single includes an assumption for an acceleration in the back half of the year if it's pretty kind of tempered loan growth throughout?

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

Yes. Great question. I think that's a good call out. It will probably be more in the back half of the year. It's hard to predict the some of the construction loans have been paying off early just because while we love the credit metrics that that speaks to it from a balance perspective that makes a little bit more challenging.

[Robert Harrison, Chairman of the Board, President & CEO at First Hawaiian]

But you can't really predict those. But we do think there will be a little bit more refinance and payoff activity in the front half versus the back half, which would then favor the back half for loan growth.

[Andrew Terrell, Managing Director at Stephens Inc]

Okay. Thank you for taking the questions. I appreciate it.

[Operator]

Thank you. And this does conclude the question and answer session of today's program. I'd like to hand the program back to Kevin Haseyama for any further remarks.

[Kevin Haseyama, Strategic Planning & Investor Relations Manager at First Hawaiian]

Thank you. Thanks everyone for joining us. We appreciate your interest in First Hawaiian and please feel free to contact me if you have any additional questions. Have a good weekend.

[Operator]

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Participants

Executives

• Kevin Haseyama, Strategic Planning & Investor Relations Manager
• Robert Harrison, Chairman of the Board, President & CEO
• James Moses, Vice Chairman & CFO
• Lea Nakamura, Executive VP & Chief Risk Officer of Risk Management Group

Analysts

• Andrew Liesch, MD & Senior Research Analyst at Piper Sandler Companies
• David Feaster, Director - Banking at Raymond James Financial
• Jared Shaw, Managing Director at Barclays
• Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)
• Anthony Elian, Equity Research Analyst at JP Morgan
• Andrew Terrell, Managing Director at Stephens Inc