First Hawaiian, Inc. (FHB 0.17%)
Q2 2022 Earnings Call
Jul 29, 2022, 1:00 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good day, and thank you for standing by. Welcome to the First Hawaiian, Inc., second quarter 2022 earnings conference call. [Operator instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Kevin Haseyama, investor relations manager.
The floor is yours.
Kevin Haseyama -- Investor Relations Manager
Thank you, Carmen, and thank you, everyone, for joining us as we review our financial results for the second quarter of 2022. With me today are Bob Harrison, chairman, president and CEO; and Ralph Mesick, chief risk officer and interim CFO. 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 safer 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.
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Bob Harrison -- Chairman, President, and Chief Executive Officer
Good morning, everyone. I'll start by giving a brief local update. The Hawaii economy continues to benefit from the recovery in the tourism industry. In June, the statewide unemployment rate was 4.3% compared to 3.6% nationally.
Total visitor arrivals were 843,000 in June, 11% below June 2019 arrivals. A strong result considering the Japanese visitors were only 1.4% of the total compared to over 13% in June 2019 This represents significant upside when Japanese arrivals return to more normalized levels. Importantly, the spend is up more than 12% over last year, which is what everyone wants, fewer visitors with a higher spend. While interest rates have caused a slowdown in the housing market, continued demand and lack of supply have kept prices stable.
In June, single-family home sales were down 20% from last year, but the median sales price of $1.1 million was 12% higher. Turning to Slide 2. We had a strong quarter, reporting net income of $59.4 million and EPS of $0.46. Pre-provision net revenue was up $8.9 million quarter over quarter.
On higher net interest income, our return on average tangible common equity was 18.79% and the board maintained the dividend at $0.26. We had good growth in both loans and deposits, and the balance sheet remains well positioned for rising rates and is well capitalized. During the quarter, we repurchased over 290,000 shares at an average price of $24.09 for $7 million. And finally, we successfully converted to our new core operating system, an important step on our digital transformation we started a couple of years back.
I want to make a few comments on the balance sheet and then provide more detail on loans and deposits. Turning to Slide 3. We saw a good growth and a nice rotation on the balance sheet, which remains asset sensitive. We're highly liquid and well capitalized to support our business objectives.
Total assets grew by 1.3% to $25.4 billion in the second quarter and the asset mix improved with the deployment of cash into higher-yielding loans. The balance sheet remains very asset sensitive with about $5.1 billion or 39% of the loan portfolio repricing within 90 days. It has been very responsive to the recent Fed rate hikes. Our liquidity position remains very strong with the 58.7% loan-to-deposit ratio, excess cash balances and steady cash flows from the investment portfolio.
We have ample liquidity to fund future loan growth. The investment portfolio has performed well during this period of volatile interest rates. The duration of the portfolio has remained stable at 5.6 years at the end of the second quarter and is unchanged from year-end 2021. Cash flows from the portfolio continue to run between $100 million to $125 million per month.
We continue to maintain strong capital levels after dividend payments and share repurchases. The common equity Tier 1 ratio was 11.98% at quarter end and the total capital ratio was 13.14%. Net of an AOCI adjustment, the securities book was flat at roughly $8.1 billion. In the quarter, we elected to reclassify $4 billion of the portfolio to held to maturity to reduce the accounting volatility associated with AOCI adjustments.
Turning to Slide 4. Period-end loans and leases were $13.3 billion, an increase of $371 million or 2.9% from the end of Q1. Excluding PPP loans, total loans and leases increased by $434 million, 3.4% compared to the prior quarter. We experienced growth in all portfolios with the largest increases in CRE, C&I, residential and home equity.
As expected, the increase in the commercial book skewed toward our mainland markets, where the rebound of loan demand started earlier. On a year-to-date basis, total loans and leases are up $301 million or 2.3%. Excluding PPP loans, total loans and leases are up $474 million or 3.7%, in line with our full year outlook of mid- to high single-digit growth, which remains unchanged. Turning to Slide 5.
Deposits increased by $331 million or 1.5% to $22.6 billion at quarter end. The increase was a result of a $439 million increase in public deposits, driven by a $458 million increase in operating account balances. That was partially offset by a $19 million decline in public time deposits. Nonpublic deposit balances declined about $108 million or less than 1%.
Our cost of deposits remained low at 8 basis points, 3 basis points higher than the prior quarter. We anticipate more variability around deposit flows over the course of the year but have a variety of options to fund loan growth, including a higher-than-normal cash balance. Now, I'll turn it over to Ralph to cover the income statement and balance sheet.
Ralph Mesick -- Chief Risk Officer and Interim Chief Financial Officera
Thank you, Bob. Moving to Slide 6. You see that our asset-sensitive balance sheet benefited from the increase in interest rates. Net interest income increased $11.2 million over the prior quarter to $145.1 million.
Excluding PPP fees and interest, net interest income increased $13.2 million. The increase was primarily due to higher yields on securities and loans and higher average loan balances. The net interest margin increased 18 basis points to 2.6%. Since the balance of unamortized PPP fees is de minimis, it will have a material impact on the NIM going forward.
At 39% of the loan -- as 39% loan of the portfolio reprices in 90 days, our balance sheet remains well positioned to benefit from rising interest rates. We expect the NIM to increase by 25 to 30 basis points in the third quarter. Turning to Slide 7. Noninterest income was $44.1 million this quarter, a $2.8 million increase over the prior quarter.
Activity-based revenue continued to do well and trust and investment services income remained stable in spite of market volatility. BOLI income continued to be negatively impacted by the volatility in bond yields and equity markets. When this volatility subsides, we expect BOLI income to return to historical levels of $3 million to $3.5 million per quarter. This would put us in line with our expectation of $47 million to $48 million per quarter.
Going to Slide 8. Noninterest expense was $109.2 million, $5.1 million higher than the prior quarter. Most of this increase had been expected with a ramp-up in implementation costs ahead of the core system conversion and the start of the new system-related expenses. These increases have been built into the most recent guidance.
Compensation-related expenses increased by $1.7 million as we saw the full quarter impact of merit increases, a reduction in capitalized salaries related to the core project and the hiring of temporary help to support us through the May system conversion. Contracted services were up $1.5 million, largely due to nonrecurring consulting fees. Equipment costs increased $1.8 million, and the increase was primarily related to the new core services contract. Looking ahead to the second half of the year, we anticipate that expenses will be between $113 million and $114 million per quarter, slightly higher than our original outlook.
The largest drivers behind this increase are higher compensation costs due to inflationary adjustments and additional post core conversion costs. Turning to Slide 9. I'll make a few comments on credit. Asset quality remains strong.
In Q2, net charge-offs were $2.3 million, about $300,000 lower than Q1. Our year-to-date annualized net charge-off rate is 8 basis points, lower than the rates over the last three years. NPAs and 90-day past due loans remained low at 10 basis points. That's flat from the prior quarter.
Criticized assets continued to decline, dropping from 1.29% of total loans in Q1 to 0.91% in Q2. The bank recorded a $1 million asset provision for the quarter. Loans 30 to 89 days past due were $54.7 million, or 41 basis points of total loans and leases at the end of Q2. The level of past dues were elevated at the end of the quarter as we implemented some operational changes related to the conversion.
By mid-July, we saw a significant improvement, with nearly half of the reported past dues being cleared, bringing us back in line with the levels we saw at the end of the first quarter. Moving to Slide 10. You see a roll forward of the allowance for the quarter by disclosure segments. The allowance for credit loss decreased $1.3 million to $148.9 million.
The level equates to 1.12% of all loans and 1.13% net of PPP loans. The reserve for unfunded commitments was $29 million. While reserve levels have decreased as we move through the post-pandemic reopening, they remain elevated to account for the macroeconomic uncertainties. Let me now turn the call back to Bob for closing remarks.
Bob Harrison -- Chairman, President, and Chief Executive Officer
Thanks, Ralph. So to summarize, in spite of the volatility in the national economy, Hawaii has experienced good visitor arrivals this summer and the local economy is doing well. At the bank, we have a good outlook for the second half of 2022 and beyond as we have a balance sheet that is well positioned for growth with good liquidity, strong capital and excellent credit quality. Now, we'd be happy to take your questions.
Questions & Answers:
Operator
[Operator instructions] Our first question comes from Steven Alexopoulos with J.P. Morgan. Please go ahead.
Steven Alexopoulos -- J.P. Morgan -- Analyst
Hi, everybody.
Bob Harrison -- Chairman, President, and Chief Executive Officer
Hey, Steve.
Steven Alexopoulos -- J.P. Morgan -- Analyst
I want to start on the deposit side. So you guys reported strong deposit growth in the quarter and the backdrop where many other banks are showing deposits running off. Curious, was that intentional? In other words, we are out there in the market competing for deposits? Or was it just flow related just coming in from the public side?
Bob Harrison -- Chairman, President, and Chief Executive Officer
Yes. Maybe I'll start and ask Ralph to add to it, Steve. So primarily, it was the operating balances of the State of Hawaii as we've had there -- we've been there depository for quite some time, and they just brought money in on balance sheet with us. Their public time deposits went down over the quarter, but we did see a substantial increase in the public operating account, the DDA account.
We saw a slight decrease in just all the consumer IPC deposits, but nothing more than kind of normal movement.
Steven Alexopoulos -- J.P. Morgan -- Analyst
OK. That's helpful. So probably -- OK. So if we look at the loan-to-deposit ratio, it's pretty low.
How do you think about funding the loan growth for the rest of the year? Do we see the loan-to-deposit ratio moving up? Or do you think you plan to hold it pretty steady?
Bob Harrison -- Chairman, President, and Chief Executive Officer
We think it should be moving up. We have a lot of cash on balance sheet, higher than normal. I think it's right about $1.3 billion. And that's higher than we would normally and certainly higher than pre-pandemic levels.
So it starts with being able to fund that rotation out of cash into loans there. And then with, obviously, the roll-off of the investment portfolio of $100-plus million a month.
Steven Alexopoulos -- J.P. Morgan -- Analyst
Got you. OK. That's helpful. And then on the margin, I appreciate the NIM guide for the third quarter.
What's the deposit beta that you're assuming underneath the NIM guide? And do you still expect this similar through the cycle data as the prior cycle?
Ralph Mesick -- Chief Risk Officer and Interim Chief Financial Officera
Yes, Steve, this is Ralph. Right now, we're assuming about a 20% deposit beta.
Steven Alexopoulos -- J.P. Morgan -- Analyst
Got it. OK. And any change to the -- through the cycle? I think you said last time it would be about similar to the last cycle.
Ralph Mesick -- Chief Risk Officer and Interim Chief Financial Officera
Yes. Right now, we're looking at it probably being similar to the last cycle. And a lot of that has to just do with kind of the level of liquidity in the marketplace right now in this, in particular.
Steven Alexopoulos -- J.P. Morgan -- Analyst
OK. That's helpful. And just finally, any updates on the CFO search?
Bob Harrison -- Chairman, President, and Chief Executive Officer
Yes. No, I meant to mention that, and we really appreciate Ralph continuing this interim. We're still working with Korn Ferry to identify the right candidate but haven't done that yet. But we're working very hard with them to make that happen.
Steven Alexopoulos -- J.P. Morgan -- Analyst
OK. Thanks for taking all my questions.
Bob Harrison -- Chairman, President, and Chief Executive Officer
Thank you.
Operator
Thank you. [Operator instructions] We have a question from David Feaster with Raymond James. Please go ahead.
David Feaster -- Raymond James -- Analyst
Hey, good morning, everybody. Look, you guys are kind of following up on the margin question. You guys are obviously extremely rate-sensitive. We've had a huge amount of margin expansion, continuing to benefit from higher rates, just got another 75, which should continue to play through.
But I guess -- and look, rate sensitivity is a natural, just natural for you all just given the business model and the strength of your core deposit franchise. But as you think about managing rate sensitivity, is there any appetite over the next couple of quarters to maybe lock in some higher rates and take some sensitivity off the table? And if you did so, what would your approach to doing that be?
Ralph Mesick -- Chief Risk Officer and Interim Chief Financial Officera
Yes, Steve, I mean, Dave, I'll start. This is Ralph. I think right now, when we think about the balance sheet, we have three levers. One being just working with the clients and the swap program, client derivatives, second being the securities portfolio and third being the just straight on balance sheet hedging activities.
I think right now, we would probably ease into any kind of a change in positioning. We wouldn't try to time the market. And we've looked at doing -- we've done a little bit of received fixed swaps in the past quarter. And then, we'll also look at probably looking at some of the maybe either swaps or collars.
David Feaster -- Raymond James -- Analyst
OK. OK. And then, maybe just touching on asset quality. Look, the macro economy is pretty volatile right now.
You've got a conservative approach to credit and phenomenal asset quality. But I'm just curious, maybe as you step back and look at a high level, is there anything that you guys are watching more closely? And how do you think about credit more broadly? Is there anything that you're seeing any signs of concern? And then, just the pulse of your clients. What are you hearing from your clients? Are they still investing in -- or are you starting to hear maybe on the margin, any type of change in a bit more trepidation just given the uncertainty?
Bob Harrison -- Chairman, President, and Chief Executive Officer
Yes. Dave, let me start, this is Bob, and maybe hand it off to Ralph. So we haven't seen any indications yet tangible evidence. As Ralph mentioned in his remarks, we saw a little blip in just collections on one consumer portfolio that's been addressed.
But generally, where we see weakness, in the consumer side, we first see it in credit cards and indirect lending, and that hasn't happened as yet. More broadly, we have to add to your other question, we've seen a couple of projects kind of push the pause button on the mainland that we were looking at, but nothing here locally. What we've seen locally is people are continuing to invest, but Ralph turn it over to you if you have comments.
Ralph Mesick -- Chief Risk Officer and Interim Chief Financial Officera
Yes. I would just say that we had the opportunity with the pandemic to really front load. And I think CECL was good for that purpose. So I think we've embedded a lot of the expectation of stress into the reserve today.
And then, when we look at the portfolio, we had the opportunity as well to really take a real deep dive. So I think we feel pretty good about what we have in the portfolio. And I would say that where we would probably see the most stress, given the current situation, is going to be smaller consumer and small business loans. And again, I think as we look at the reserve, we've taken, I think, a pretty big overlay to support any stress we see there.
David Feaster -- Raymond James -- Analyst
OK. And then, just last one for me. Maybe just with the core conversion completed, could you talk about some of the immediate benefits of this? You mentioned some operational changes. And then, just curious, what's next on the docket? You've done a phenomenal job on the tech front.
Just curious whether there's any other upcoming investments or partnerships that you might be interested? And what initiatives are next up on the tech front?
Bob Harrison -- Chairman, President, and Chief Executive Officer
Well, I thought we were going to get a quarter off, Dave, before we had to answer that question.
David Feaster -- Raymond James -- Analyst
What have you done for me lately?
Bob Harrison -- Chairman, President, and Chief Executive Officer
Yes, exactly. No, we -- there's still some follow-on stuff for the core project that we're working through. It primarily was to automate a number of our manual processes. And so, that has mostly happened and working through, as I said, the bits of that.
What's next on the agenda? We have a pretty aggressive road map that Chris Dods, our COO, has laid out for us. And we're going to be executing on that throughout the rest of this year and next year and a lot of things coming. If you don't mind, I'd rather answer that more fully next quarter when some of those are more in flight than they are today when we're just kind of really getting through the last of the core conversion and kind of picking up the pieces and candidly giving people a little bit of a break as well.
David Feaster -- Raymond James -- Analyst
Are we looking at maybe more internal efficiency improvement or outward growth kind of initiatives? Or is it, again, just don't want to talk about it yet?
Bob Harrison -- Chairman, President, and Chief Executive Officer
It's both. Clearly, we're always trying to be more efficient in what we're doing, but at the same time, what we're looking at is provide more convenience for the customer and enhancing. For example, with the core conversion, we're able to enhance our online account opening. And we're going to be spending more time on that going forward to further enhance that, but that's one of the benefits we got just with the core conversion.
And that's an example of the things we're going to continue to be doing over time.
David Feaster -- Raymond James -- Analyst
All right. Thanks, everybody.
Operator
[Operator instructions] Our next question is from Andrew Liesch with Piper Sandler. Please go ahead.
Andrew Liesch -- Piper Sandler -- Analyst
Hey. Good morning, everyone. Just want to follow up on the loan growth guidance still seems intact, but how does the pipeline sit today? And I guess, what's the makeup of the pipeline? Is it still more weighted toward commercial real estate and C&I? And then, any comments around what you're seeing in the dealer flooring book would also be appreciated?
Bob Harrison -- Chairman, President, and Chief Executive Officer
Sure, Andrew. This is Bob. Maybe I'll take that question to start off with and ask Ralph to add additional comments. What we're seeing -- what we saw, as I mentioned in my remarks, is we saw, as you saw, heavy commercial real estate growth.
Most of that was on the mainland this quarter. We still see a good pipeline going forward for the quarter we're in, more of a mix back to Hawaii. Probably a little bit heavier in the mainland this quarter, but pretty strong Hawaii pipeline for the quarter we're in. We're still expecting to see some C&I growth, some of that's dealer along with residential and HELOC.
For the dealer, it's been eking some gains up quarter after quarter for this year and we're starting to see some continued recovery in that. I don't think we'll see kind of broad-based volume coming out of the manufacturers to closer to year-end or maybe into 2023, to be honest. So Ralph, anything you'd add to that?
Ralph Mesick -- Chief Risk Officer and Interim Chief Financial Officera
No, not really.
Andrew Liesch -- Piper Sandler -- Analyst
Got you. And then, the residential in the HELOC, is that local? Or is that of the mainland?
Bob Harrison -- Chairman, President, and Chief Executive Officer
Yes. We're only doing those products within our geographic footprint.
Andrew Liesch -- Piper Sandler -- Analyst
OK. That's what I thought. All right, you've covered all my other questions. I'll step back.
Thanks.
Bob Harrison -- Chairman, President, and Chief Executive Officer
Thanks, Andrew.
Operator
Thank you. [Operator instructions] Our next question comes from Kelly Motta with KBW.
Kelly Motta -- Keefe, Bruyette and Woods -- Analyst
Hi. Good morning. Thank you so much for the question. If I could circle back to NIM and the deposit side, you obviously had the big inflow of public deposits this quarter.
Just wondering if you could remind us of the seasonality, maybe the pricing of the public deposit book, as well as if you're -- what your NIM guidance assumes in terms of either maybe outflows of those to seasonality? Just curious if I can get the balance sheet kind of rightsized?
Ralph Mesick -- Chief Risk Officer and Interim Chief Financial Officera
Yes. I would say that -- this is Ralph. I would say the public deposits there operating comps, they're probably -- it's really hard to predict what the state will do, but they're probably in a range which we would anticipate going forward. And we had been working with them during the pandemic to try to get them to put some of that money into alternatives asset classes or, I should say, investment, short-term investments, just to help us keep some leverage off the balance sheet.
So I think that's probably going to stick. We don't anticipate at this time getting into the public time space. And I think when you look at the balance sheet itself, given the cash position, given the securities runoff and just given the level of high-quality assets, we probably can fund growth and take some deposit loss and protect our margin. So I think we feel pretty good about the NIM guidance right now.
Kelly Motta -- Keefe, Bruyette and Woods -- Analyst
OK. And then, maybe last for me, most of my questions have been actually answered. Just on the buyback, you back in the market this quarter, wondering about your appetite for further share repurchases going forward.
Bob Harrison -- Chairman, President, and Chief Executive Officer
Yes. Kelly, this is Bob. So that's something capital return to shareholders is very important to us. That's why we keep our strong dividend.
One of the issues, though, as we talked about, I believe, last quarter and maybe even at the fourth quarter call, is anticipating this higher loan growth, and we have retained our internal guide of looking for a 12% common equity Tier 1. So we'll probably see muted buybacks for at least a good chunk of this quarter until we get a better feel for what the loan growth is going to be because we do want to make sure we retain and maintain the strong capital level. Later in the year, we'll certainly be looking at that regularly, and maybe that will change. But for now, we're really going to be focused on growing quality loans and supporting that with a good amount of capital.
Kelly Motta -- Keefe, Bruyette and Woods -- Analyst
Got it. That's all for me. Thanks so much.
Operator
Thank you. [Operator instructions] I have a question from Laurie Hunsicker with Compass Point. Please go ahead.
Laurie Hunsicker -- Compass Point Research and Trading -- Analyst
Hi. Thanks. Good morning. Ralph, I have a question going back to margin.
I feel like we're all asking on margin. But the 25 to 30 basis point guide, is that core ex PPP? In other words, I'm looking, your PPP fees, looks like we're about 3 basis points on margin. So are you thinking that as the 257 starting point or a 260 headline? How are you thinking about that?
Ralph Mesick -- Chief Risk Officer and Interim Chief Financial Officera
Yes. I think the 25 basis points would be up PPP. PPP is going to be a pretty small contributor going forward.
Unknown speaker
That's off the 260.
Bob Harrison -- Chairman, President, and Chief Executive Officer
Yes. So that would be off the 260, Laurie. Yes.
Laurie Hunsicker -- Compass Point Research and Trading -- Analyst
Right, right. And I'm aware that PPP is. OK. Just wanted just to clarify.
OK. And then, on noninterest income, your guide, did that assume anything in terms of changed overdraft and NSF fees? Or how are you thinking about that?
Bob Harrison -- Chairman, President, and Chief Executive Officer
This is Bob. We think that's going to be flat. As you've seen, our reported results have been down over the last couple of years, and we're not going to see much growth in that area. So we're really not relying on that.
What we see is, I think Ralph touched on, is as market volatility dampens a bit, a return of a more normalized BOLI income for noninterest income.
Laurie Hunsicker -- Compass Point Research and Trading -- Analyst
Right. Yes, I appreciate that 3% to 3.5%. That's helpful. But your overdraft in MSPs is that then something you probably are going to address in 2023? Or --
Bob Harrison -- Chairman, President, and Chief Executive Officer
Well, that's something that obviously a lot happening on that nationally, and we're following that. We're looking at alternatives. Candidly, during the core conversion isn't the time to be changing structures like that, but we are looking at it and we haven't made any decisions yet as far as any potential changes, but we're certainly.
Laurie Hunsicker -- Compass Point Research and Trading -- Analyst
Got it. OK. And then on expenses, I appreciate your guide there. Can you help us think about with the -- obviously, you had a lot of moving cards driving your expenses higher this year, but how we should be thinking about expense growth into 2023?
Bob Harrison -- Chairman, President, and Chief Executive Officer
Yes. Laurie, this is Bob again. That's a little far out for us right now. Certainly, we're comfortable with the guide that Ralph gave of $113 million to $114 million for the next two quarters.
But we'll have to wait until later in the year to get really an outlook for 2023.
Laurie Hunsicker -- Compass Point Research and Trading -- Analyst
OK. OK. And then, just last question with starting to flash. Can you give us a refresh just on two loan categories or office, as well as leverage lending.
Can you just refresh us on what those look like and remind us with Hawaii based versus Mainland base?
Bob Harrison -- Chairman, President, and Chief Executive Officer
Sure. Happy to. Total office is about $884 million. About a third of that is small balance CRE, we call that small balance being under $5 million.
So very often, that's mixed use, partly owner-occupied, etc. The Mainland exposure is $373 million, with about $150 million of that being in transactions involving collateral pools with multiple properties. So less tenant concentration, a lot of cross collateralization, etc. Hawaii exposure is $466 million, and that includes a lot of that small balance loans.
And in Guam, we have about $45 million, all of which is small balance loans. Of that portfolio, about $2.9 million is classified. So a very, very small number. Moving to -- sorry?
Laurie Hunsicker -- Compass Point Research and Trading -- Analyst
Did you have an LTV on that?
Ralph Mesick -- Chief Risk Officer and Interim Chief Financial Officera
We don't think that's really -- I think the better approach is to take a look at what the low classifieds are and they're really about $2.9 million. Yes.
Laurie Hunsicker -- Compass Point Research and Trading -- Analyst
OK.
Bob Harrison -- Chairman, President, and Chief Executive Officer
Yes. And then, we're always looking at this and looking at the stressing the tenancy, the rollover risk, the concentration, all of that. So we're very comfortable with that. And then, we also have within our reserve an overlay in the CRE space.
For any potential stresses that may come up, we may be seeing some of that today, but we don't see a lot of it here within our markets. Moving over to leveraged loans as -- I mean, that's -- there's not a common definition for that. So we're trying to piggyback off of -- I think it's the OCC definition, which is six times debt commitments, not outstanding debt commitments to EBITDA. And using that metric, we have $39 million at quarter end and all our pass rated.
And just to remind you about this time in 2019, we did sell off over $400 million of our SNC portfolio, some of which included leverage lending as well. So we really took that number down in 2019.
Laurie Hunsicker -- Compass Point Research and Trading -- Analyst
Great. Thanks for the color.
Operator
Thank you. And I'm not showing any further questions in the queue. I'm going to turn it back to Mr. Haseyama for his final thoughts.
Kevin Haseyama -- Investor Relations Manager
Thanks, Carmen. We appreciate your interest in Best Hawaiian. And please feel free to contact me if you have any additional questions. Thanks again for joining us, and have a nice weekend.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Kevin Haseyama -- Investor Relations Manager
Bob Harrison -- Chairman, President, and Chief Executive Officer
Ralph Mesick -- Chief Risk Officer and Interim Chief Financial Officera
Steven Alexopoulos -- J.P. Morgan -- Analyst
David Feaster -- Raymond James -- Analyst
Andrew Liesch -- Piper Sandler -- Analyst
Kelly Motta -- Keefe, Bruyette and Woods -- Analyst
Laurie Hunsicker -- Compass Point Research and Trading -- Analyst
Unknown speaker