Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Central Pacific Financial Corp. First Quarter 2022 conference call. During today's presentation, all parties will be in listen-only mode. Following the presentation, the conference will be open for questions. This call is being recorded and will be available for replay shortly after its completion on the company's website at www.cpb.bank. I'd like to turn the call over to Mr. David Morimoto, Executive Vice President, Chief Financial Officer. Please go ahead.
Thank you, Lydia, and thank you all for joining us as we review the financial results of the first quarter of 2022 for Central Pacific Financial Corporation. With me this morning are Paul Yonamine, Chairman and Chief Executive Officer, Catherine Ngo, Executive Vice Chair, Arnold Martines, President and Chief Operating Officer, and Anna Hu, Executive Vice President and Chief Credit Officer. We have prepared a supplemental slide presentation that provides additional details on our release and is available in the investor relations section of our website at cpb.bank.
During the course of today's call, management may make forward-looking statements. While we believe these statements are based on reasonable assumptions, they involve risks that may cause actual results to differ materially from those projected. For a complete discussion of the risks related to our forward-looking statements, please refer to slide two of our presentation. Now I'll turn the call over to our Chairman and CEO, Paul Yonamine.
Thank you, David, and good morning, everyone. As always, we appreciate your interest in Central Pacific Financial Corp. We are pleased today to share our strong first quarter financial results, as well as provide updates on our market and our digital transformation strategies. Our Shaka Checking digital product, launched in Hawaii last November, continues to grow in account holders and customer engagement. Over 60% of our Shaka customers are now checking account holders to the bank, giving us a great opportunity to further build banking relationships and engagement. Building upon our successful rebrand in 2021, earlier this month, we launched a new brand campaign called Digital Banking the CPB Way that focuses on our high-tech, high-touch business approach in Hawaii, which offers best-in-class digital technology while providing the exceptional customer service that we are known for.
We continue to advance our recently announced Banking-as-a-Service mainland expansion strategy and remain very optimistic about the opportunity. The new fintech entity, Swell Financial, which we incubated last year, was formed at the beginning of this year. In February, Swell successfully completed a $10 million Series A preferred funding round, which CPF also participated in. The Swell Money app, with an integrated checking and line of credit product, is on track to publicly launch in the summer, with CPB serving as the bank sponsor utilizing our Banking-as-a-Service technology platform. We believe Swell's product will be unique in the market and that it addresses a large underserved group in the U.S. that we call strivers. At the same time, we continue discussions with several other potential fintech partners for future Banking-as-a-Service expansion.
We are seeing growing interest in this area, but we are being selective in who we collaborate with as we are focused on profitable and sustainable business models for both parties involved. Finally, our digital transformation encompasses all areas of our business, and we continue to make progress on other digital enhancements, such as a new Trust Management system that went live at the beginning of this year, a new consolidated loan and deposit origination system initiative that will be developed throughout this year, and other back office efficiency and automation initiatives. Next, here to talk about the Hawaii economy and our strong position, here is Catherine Ngo, our Executive Vice Chair. Catherine.
Thank you, Paul. I'll start by giving an update on the Hawaii environment. Along with most of the nation, Hawaii removed nearly all COVID-related restrictions during the first quarter and is pleased to be returning to a sense of normalcy. Our Safe Travels program that required people entering the state to be fully vaccinated or have a negative COVID test to avoid quarantine ended in March. With that positive development, we are seeing a continued increase in visitors to the islands. Month to date, April 2022, average air arrival counts surpassed pre-pandemic levels in April 2019 despite limited international visitors. International visitors to Hawaii have not yet returned in a meaningful way. Historically, pre-pandemic visitors from Japan made up a significant portion of Hawaii's tourism economy, with about 1.6 million Japanese visitors each year, accounting for about 16% of all visitors to the state.
Recently, Japan has started to ease quarantine requirements, and with Golden Week coming up in a couple of weeks, we are anticipating an increase in Japanese visitors. Our company is also starting to resume business travel to Japan, and we believe this is an opportunity for us to differentiate the bank given our strong strategic relationships. Our statewide unemployment rate continued to decline and was at 4.1% in March 2022. The housing market in Hawaii remains very strong with our median single-family home price soaring to a new record high of $1.15 million in March 2022, which is up 21% from the previous year.
Overall, Hawaii economy remains on track for recovery. Our asset quality continued to be very strong, with non-performing assets at just seven basis points of total assets as of March 31st. Additionally, total criticized loans were only 1.5% of total loans. Finally, during the quarter, we had net charge-offs of just $400,000. I'd like to now turn the call over to Arnold Martines, our President and Chief Operating Officer. Arnold?
Thank you, Catherine. In the first quarter, our core loan portfolio increased by $120 million, or 2.4% sequential quarter, which was partially offset by PPP forgiveness payouts of $47 million. The core loan growth was broad-based across almost all loan categories. As expected, Residential Mortgage loan growth slowed during the first quarter due to seasonality and rising interest rates. This was offset by strong net growth in home equity outstanding balances of $39 million. PPP forgiveness continues to progress well, with only $44 million remaining on our balance sheet as of March 31st. Central Pacific Bank is proud to be recognized as Hawaii's leader in small business loans, with us being named by the SBA Hawaii office as Lender of the Year, Category 2 for the 2021 fiscal year.
CPB originated more SBA 7(a) loans in 2021 than the other major Hawaii banks combined. We are pleased to support Hawaii's small businesses, a strategic pillar for CPB, and continue our mission to empower the people of Hawaii. During the first quarter, we continued consumer unsecured and auto purchases with our established vendors to strategically complement and diversify our portfolio. The purchases during the quarter were all within our established credit limits and had a weighted average FICO score of 730. Our net growth in mainland consumer purchases and purchase loans was $42 million in the first quarter. As of March 31st, total mainland consumer unsecured and auto purchase loans were approximately 6% of total loans. Both our mainland and Hawaii consumer portfolios continued to perform well. We anticipate maintaining our total mainland loan portfolio, including commercial and consumer, at around its current level in the near term.
With Hawaii's steady economic recovery, we have a healthy loan pipeline in all loan product categories, and we are expecting our loan growth trends to pick up further throughout the remainder of 2022. Finally, after experiencing significant core deposit inflows in 2021, during the first quarter, we had slight runoff, with core deposits decreasing by $37 million, or 0.6% from the prior quarter. Additionally, our average cost of total deposits in the first quarter held steady at just 6 basis points. I'll now turn the call over to David Morimoto, our Chief Financial Officer. David?
Thank you, Arnold. Net income for the first quarter was $19.4 million, or $0.70 per diluted share, an increase of $1.4 million, or $0.06 per diluted share from the same quarter a year ago. Return on average assets in the first quarter was 1.06%, and return on average equity was 14.44%. Net interest income for the first quarter was $50.9 million, which decreased by $2.2 million from the prior quarter due to less PPP fee income as the forgiveness process winds down. Net interest income included $1.9 million in PPP net interest income and net loan fees, compared to $4.7 million in the prior quarter. At March 31st, unearned net PPP fees was $1.7 million.
Net interest income during the first quarter also included $ 500,000 in non-recurring interest recoveries. The net interest margin decreased to 2.97% in the first quarter, compared to 3.08% in the prior quarter. The NIM normalized for PPP and interest recoveries was 2.85%, compared to 2.87% in the prior quarter. Our balance sheet remains slightly asset sensitive, and we therefore anticipate our margin will trend up with further Fed interest rate hikes. First quarter other operating income was $9.6 million, compared to $11.6 million in the previous quarter. The decrease was driven by lower mortgage banking and bank-owned life insurance income. Other operating expense for the first quarter was $38.2 million, which was a decrease from the prior quarter, which included several large one-time expenses.
Additionally, in the first quarter, total salaries and benefits trended down due to seasonal and market-related adjustments, including lower commissions and incentive compensation accruals, as well as less deferred compensation expense. Going forward, we expect that quarterly recurring other operating expense will be in the $40 million-$42 million range. We are executing on our plan to consolidate three additional branches this year, with two scheduled in the second quarter and another in the third quarter. The total go forward annual expense savings from the three branch consolidations is estimated at $0.9 million. The efficiency ratio decreased to 63.2% in the first quarter due to lower other operating expenses. We remain focused on driving positive operating leverage with our strategic initiatives to continue to improve efficiency.
As of March 31st, our allowance for credit losses was $64.8 million, or 1.26% of outstanding loans, excluding PPP loans. In the first quarter, we reported a $3.2 million credit to the provision for credit losses due to continued improvements in the economic forecast and our loan portfolio. The effective tax rate decreased slightly to 23.7% in the first quarter. Going forward, we expect the effective tax rate to be in the 24%-26% range. As a result of market interest rates rising, our available for sale investment securities portfolio moved into a larger unrealized loss position, which is reflected in accumulated other comprehensive income in total shareholders equity on our balance sheet.
To mitigate further portfolio debt valuation impact, we transferred $330 million in securities to held to maturity during the first quarter. Additionally, we executed on a pay fixed, receive floating, two year forward starting interest rate swap on an additional $150 million of investment securities. Our capital position remains strong, and during the first quarter, we repurchased roughly 235,000 shares at a total cost of $6.7 million or an average cost per share of $28.65. Additionally, our board of directors declared a quarterly cash dividend of $0.26 per share, which will be payable on June 15 to shareholders of record on May 31st. I'll now return the call to Paul.
Thanks, David. Central Pacific had a solid first quarter and continues to be well-positioned with strong liquidity, capital, and asset quality. We continue to execute on our strategic initiatives and believe that 2022 will be another pivotal year for the company, supported by a good economic environment. With much optimism, we are pushing boldly forward on our parallel strategies to continue to grow and expand market share in Hawaii and through our mainland expansion, starting with the introduction of Swell. On behalf of our management team and employees, I'd like to personally thank you for your continued support and confidence in our organization. At this time, we will be happy to address any questions you may have. Thank you. Back to you, Lydia .
Thank you. If you'd like to ask a question, please press star followed by one on your telephone keypad now. To withdraw your question, please press star followed by two. Our first question today comes from David Feaster of Raymond James. Your line is now open.
Hey, good morning, everybody.
Hey.
Good morning, David.
I wanted to touch on the growth outlook. Could you maybe walk us through some of the drivers that you're expecting with regards to the accelerating loan growth commentary that you had in the prepared remarks? You know, what segments you're seeing the most strength, how much you'd expect to come from Hawaii versus the U.S. mainland, and then just whether you're expecting any additional loan purchases to supplement the organic growth.
Sure. I'd be happy to do that, David. You know, as you can see, we had a pretty respectable first quarter on growth. Let me have Arnold Martines take that question. Arnold?
Yeah. Thanks, Paul, and good morning. Good morning, David. You know, we're pretty optimistic about our loan growth for the year. I think the drivers right now for us is going to be construction, C&I, commercial mortgages, as well as, you know, the consumer book. You know, we're seeing a nice growth on the Hawaii side, but also continuing our purchases on the mainland with our strategic partners. I think those areas are gonna drive growth for us this year. You know, with regard to residential, I think we all know that the interest rates have increased, and that certainly has impacted the refi market. That's basically drying up.
I think we saw a tail of that refi market in the first quarter, but we expect as we move forward that that's going to dry up. For resi, we're looking probably in the near term at normalized levels of production for, you know, in the $150 million-$160 million range. We're optimistic about that just because of our purchase market strength. You know, as you know, David, you know, we have joint ventures with developers as well as a pretty strong position with the realtor market here in Hawaii. All in all, I mean, we're still affirming, you know, mid to high single-digit growth for loans this year.
Okay. That's helpful. Does that include any additional purchases in that?
Yes. We're absolutely gonna be including more purchases. You know, for the purchases is really, you know. I know that it's purchases, but it has become part of our business model. We continue to look at these partners strategically, and we will continue to make purchases for auto loans and unsecured loans going forward, to the extent that we believe it helps to augment the diversification in our loan portfolio as well as yield.
Absolutely. Maybe just switching gears to deposits, could you maybe talk a little bit about your outlook for deposit growth going forward and maybe, you know, some thoughts into what drove the sequential decline? Was it just seasonal tax payments, you know, PPP usage, and again, just the overall expectation for deposits? Just a little bit on the Shaka digital account. You know, it's great to see the continued growth there, but any commentary about how balances are trending and cross-selling initiatives thus far would be helpful.
Sure, David. So, you know, with regard to deposits, you know, and actually, we had a few larger deposits related to a few customers that came in in the fourth quarter. We actually thought it was going to leave in the fourth quarter, but it actually carried over to the first quarter. That really was the reason why we had a moderate decrease in deposits. All in all, overall, we're still seeing, you know, a fairly robust activity in deposits and, while, you know, we'll have to see how the market dynamics play out this year, you know, we're still anticipating, you know, mid-single digit growth in deposits.
With regards to Shaka, you know, it's probably still too early for us to talk about balances just because, as you know, as we onboard and activate these almost 4,000 customers that opened up accounts and, you know, Paul mentioned earlier, about 60% of those customers are new to the bank. As we work with them to activate their accounts in debit card usage, direct deposit, you know, ACH-type transactions of utilizing the accounts for mobile deposits, et cetera, you know, we're gonna start to see some of those balances increase over time.
I'll just say that I'm pretty pleased, I mean, we are pretty pleased with the progress we've made. You know, at this point, I can say that of the accounts that we have, you know, 70% are fairly active, meaning we define active by having multiple type transactions, whether it's debit card, direct deposits, using a person-to-person type payment functionality. Good progress. More to come in future quarters.
That's terrific. Maybe just touching on the Banking-as-a-Service initiative, could you just walk through maybe the timeline and where we are? You know, we've got the funding that was just completed. Just curious where we are in the launch, what the next steps are, and then just any expectations that you might have for that program and when we might start seeing some contribution.
Sure, David. You know, we're very pleased with the progress we're making on in our Banking-as-a-Service initiative, especially around our investment and our sponsorship with Swell based out in Colorado. The mobile app, the application and architecture continues to be built on. It's you know, so far on time, on schedule, and we're hoping to see a launch you know, this summer. You know, we've had an opportunity in the past several months to take a really hard look at the credit risk.
Again, if you recall at our last call last quarter, we talked about this competitive advantage that we have because of our relationship with management at Swell and also Elevate, and now our additional investor called Park Cities Asset Management. I think it's a lot of that interaction that allows us to be very agile and yet take a very risk-adjusted approach. I wanted David to just once again touch on you know some of the risk-adjusted features that we have been able to institute for our Swell offering, because I think this is a really important point, how CPB will be able to iterate and learn and test as we start to scale it. David?
Yeah. Thanks, Paul. David, what Paul is referring to is, you know, again, we think we've built something rather unique with Swell Financial and with Elevate. You know, there will be unsecured lines of credit as part of the Swell program. It's called Swell Credit, the product. Elevate is doing the underwriting for the Swell credit line, unsecured lines. What's unique is Elevate is providing Central Pacific with a credit guarantee. Elevate is absorbing 100% of the credit losses on the Swell lines of credit. We've worked with our accountants to figure out net accounting for the Swell lines of credit.
While the lines of credit will be on Central Pacific's balance sheet, Central Pacific will not record any net charge-offs, and we will not have to provide an allowance for credit losses for those Swell loans. Again, we think we negotiated something unique. Elevate is providing a 100% credit guarantee. They are also providing a cash deposit that will sit at Central Pacific Bank. Again, I think we've done something unique and something that is gonna be very valuable to Central Pacific moving forward.
David, this is Paul again. I just wanted to also add that, you know, as we again touched on last quarter, we invested a total of $2 million into Swell. It is treated under the cost method of accounting on our books. We've been able to demonstrate that we don't have control of that entity. Happy to also report that Swell is beating their expense control. They are coming in less than what we had originally projected, so there's absolutely no issue on the investment amount that we carry on our balance sheet. We're again, you know, the net is we're very pleased with that progress. That's the Swell component, David. Naturally, we also have a number of new fintech partnerships where we are affiliated with them, and we will be working with these fintechs to launch certain services. We can touch on that later if you're interested. Thank you.
That's helpful. Thank you.
Our next question comes from Andrew Liesch of Piper Sandler. Your line is open, Andrew.
Hey, good morning, everyone. Just wanna talk about the margin here. You mentioned a little bit asset sensitive. But maybe some more detail there with the expectation that the Fed's gonna be raising 50 basis points next month. How do you. Is there gonna be a benefit right away from that? And what are you expecting with like deposit betas? Any sort of loan pricing maybe if we get another 50 basis points shortly thereafter?
Yeah. Hey, Andrew. It's David. You know, as we've stated, the balance sheet is slightly asset sensitive. In a 100 basis point shock, net interest income increases by roughly 5%. Obviously there's a lot of assumptions embedded in there, the largest being the modeling of the indeterminate maturity deposits. We think we may be a little bit conservative on the modeling there. We're modeling a weighted average 20% deposit beta. We're hopeful that we don't need to reprice that quickly, especially in the early goings of the rate increases.
Got it. Okay. That's helpful. I guess it sounds like the rise in mortgage rates have kind of curtailed production there, but you still have some other tailwinds. How are you balancing, I guess retaining some of these mortgages on the balance sheet versus selling them? Is this $1.2 million or so that you had in the first quarter for gain on sale, should we just be using that number going forward?
Yeah, Andrew. You know, historically the company has retained roughly 50% of originations and sold the remaining. We're trying to stay on that path. It will result in gain on sale probably coming down a bit, you know, maybe to the $800,000 to $1 million per quarter level. But we're trying to stay that balance. You know, we've discussed you know about retaining more, you know.
With mortgage rates now getting above 5%, you know, should we retain more on the balance sheet? But we're kind of trying to stay the course because as we all know, you know, Residential Mortgages is one of the assets that, you know, when rates decline, it prepays rather quickly. One of the most negatively convex assets on our balance sheet. You know, while you may enjoy a 5% yield for a period of time, it can be taken away from you rather quickly. We're kind of trying to stay the course, 50/50.
Right. Okay. That's it for me. I'll step back on the queue. Thanks.
Thank you. As a reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad now. Our next question today comes from Laurie Hunsicker of Compass Point. Please go ahead.
Great. Hi. Thanks. Good morning. I was hoping we could just go back to the loan book here. Can you refresh us in terms of where you are with your SNC book, both Hawaii-based and mainland-based, and how you're thinking about growing that?
Hi. Hi, Laurie. This is Arnold. Good morning.
Hey, Arnold.
Good morning, Laurie. I would say that, you know, we do have, you know, some transactions in the pipeline for SNCs. You know, we're looking selectively with regard to, you know, how we can grow the SNC portfolio over the year while balancing other product categories, you know, other loan categories. You know, as of the end of the first quarter, we were about $156 million in SNC. That's a combination of Hawaii and the mainland. I would say it's not gonna be a large, you know, a big driver for growth, but we would look selectively based on risk and yield.
Got it. Okay. I just wanna make sure I heard that right. You said you were $166 total. Is that correct?
$156 million .
$156 million. Okay. That's down pretty sharply. I had you guys at $192 million at the end of the year. Is that
Laurie, I think the $156 million is just the mainland. I think that other number you just referenced is the combination of mainland and Hawaii. I can
Got it.
Circle back with you, Laurie, on the details.
Perfect. Okay.
Sorry.
On the consumer side.
Laurie, let me clarify.
Yeah.
Sorry, let me clarify . The mainland is $156 million, and Hawaii is about $58 million.
$58 million. Okay. That's helpful. Okay. Wow. That grew pretty sharply. Okay. Then on the consumer side, obviously you've got a lot going. I do wanna follow up on Swell, but can you help us think about. I mean, your credit is remarkably clean. The only area really that we're seeing charge-offs is on the consumer side. Which bucket of the consumer are those charge-offs coming from? Just how are you thinking about that specific bucket or buckets?
Hi, Laurie. This is Anna.
Hi, Anna.
You know, the bucket for the consumer is it's primarily in our unsecured consumer. There is a piece coming from the mainland purchase portfolio. I would say that-
Okay.
Yeah, for first quarter, mainland comprised about 41% of that charge-off amount, fairly small, and about 59% coming from the Hawaii consumer book.
Okay. Certainly your—I mean, your unsecured consumer book is very, very high FICO versus, you know, what you're planning to do with Swell, Elevate here. Can you just give us a refresh? I have a couple questions around that. I had your initial equity investment in the Swell, Elevate as $1.5 million, and I think Paul mentioned $2 million. I don't know if the $2 million was rounded or if you guys decided to invest another $500,00 . Do you have any color on that?
This is Paul, Laurie. It comprises $1.5 million in what we refer to as sweat equity. You know, a lot of the costs that we incurred while we incubated Swell, and there was an additional half a million in cash as we incorporated the entity. In total it's $2 million.
Got it. Okay. Is there any refresh in terms of how much you plan to put on the book this year, how you're thinking about it next year in terms of consumer loans, and then also in terms of where the FICO buckets are gonna break, how you're thinking about that?
Sure. Yeah. You know, we've had an extensive discussion, you know, with our board. We wanna take a very risk-adjusted approach in how we launch Swell. Our budget and our projections, again, that was approved by our board as well, is something south of $8 million in terms of loan originations by Swell in this current fiscal year. That represents a cap for us at this time, where we'll be able to again, iterate, learn, make adjustments. We'll have weekly dashboards to look at the originations, payments, defaults.
I think it's being structured quite well to make sure that we manage credit risk. That's the game plan for this current year. You know, going forward, we'll see how things play out this current year. You know, as you know, it's a very dynamic environment today with rates, the war in Ukraine and so forth and so on, and we have to go slow and iterate and learn.
Yeah. No, I love hearing you're going slow. Are you still targeting FICO scores in the range of 650 or do you have a refresh on that for the $8 million?
Yeah. You know, Laurie, we you know again we're not going sub-prime at all. We're going near-prime and above. You know and I only hesitate to talk about FICO scores because Elevate has a very robust credit analysis approach and where they utilize 16 different credit factors. Not only that, they have close to you know over a decade of experience in naturally doing sub-prime. This is an endeavor where we are going more near-prime and above, which we call the strivers group, and we think that there's a huge market opportunity in the mainland U.S. You know once again I don't really wanna pigeonhole ourselves with one particular FICO score.
Okay. I mean, I guess I would just say that, you know, people obviously break differently in their definition of sub-prime. I tend to be very, very conservative. I think anything south of 660 is sub-prime, but I understand where you're coming from with near-prime. I mean, I guess some of my concern is that Elevate is all of $90 million in market cap with all of $100 million in tangible common equity, right?
So a credit guarantee, if you all are putting on a substantial amount of Swell Elevate loans, I mean, there's potential risk there. I guess, you know, I guess maybe, Paul, if you can help us understand a little bit, if the $8 million performs as you expect it to, then what is the projection for what you potentially would do in 2023? I mean, right now o ur December derives off of 2023. I'm just trying to understand that a little bit.
Sure, you know, Laurie, first off, you know, on the credit default swap that David explained earlier, the arrangement that we have with Elevate currently is that they literally put in a deposit with our bank where we have a priority interest in, a preferred interest in. Regardless of their valuation or their financial condition, you know, under the terms of that agreement, we actually secure a 6% credit default deposit from them with a preferred interest on it. It's the perfect scenario for this current year as we again iterate and learn on how we do this. This is an area as we go after the strivers market.
This has not really been widely done by any fintech or financial institution, you know, in this manner. Given the existence of weekly dashboards where I will personally be, you know, taking a close look at, we will make course corrections and pivot as necessary. Again, I you know I feel that it is a very prudent and you know risk-adjusted approach that we have in mind today. You know, I also want to just mention that I think for most community banks today, you have to get into this field on how we collaborate with fintechs. I think we're, you know, fooling ourselves because this is the direction the world is going to, even here in Hawaii.
We've been very fortunate again with the relationship with Swell and Elevate, that we can really work together and be very transparent with each other in coming up with a really good risk-calculated approach. As far as 2023 is concerned, I really don't wanna go there yet, Laurie. You know, I believe that we need to have more time as we go live with the Swell platform this summer. As we iterate and learn, we'll have a better view on how we wanna scale it up in 2023, and we'll be happy to talk about that in subsequent quarters.
Okay. That's great. I appreciate all the color. Just one more question, David, over to you. Non-interest income. Can you just refresh us a little bit on your NSF fees, how you're thinking about that going forward? As that obviously is a little bit of an industry hot button.
Sure, Laurie. NSF fees for CPF. You know, we're not, you know, overly dependent on NSF fee income. Last year it totaled $3.7 million, and in the first quarter it was $1.1 million. It is ramping up as activity returns to normalcy. But I think relative to some of our peers, you know, we're less reliant on NSF income. Our strategy going forward is to stay the course for now.
We're obviously watching what's happening with the CFPB. But, you know, what we've heard from, you know, with regard to the CFPB is, you know, their focus on NSF may be misplaced. You know, it's a feature that consumers like and want, and the amount of complaints going into the CFPB are really low relative to other types of complaints. Anyway, we're staying the course for the time being, but we're watching what's happening with the CFPB. We're watching what's happening with our industry peers.
Great. Thanks for taking my questions.
Thanks, Laurie.
We have a follow-up question from Andrew Liesch. Please go ahead.
Hey, thanks for taking the follow-up here. Just on the share of purchases and capital right now, obviously the AOCI had hit the TCE ratio, but regulatory capital ratios are all pretty strong. What should we be thinking about for the buyback here, similar pace to what we've seen in the last couple of quarters, or how do you think we should adjust our outlook there?
Hey, Andrew. It's David. What I'll say is we're obviously committed to the quarterly cash dividend. That will continue. The share repurchase plan is gonna be a little bit more of a variable. It's always gonna be at management's discretion, and it's gonna be a function of stock price and, you know, our other options for uses of capital. I would say it's gonna be a little more flexible than it has been in the past on the repurchase plan.
Okay. Very helpful. Thanks for taking the follow-up.
Thanks, Andrew.
Finally, we have a follow-up from David Feaster. Your line is open.
Hey, thanks. Just wanted to follow up on Lori's line of questioning. Just kind of on the fee income front. You know, taking that kind of $800,000 to $1 million on the mortgage side, some of the NSF impacts like you talked about. Just curious, you know, I know you guys have some fee initiatives in place. Just curious how you think about that fee income line as a whole and how you'd expect the progression over the course of the year.
Yes. Yes, David. David, you know, the first quarter was a down quarter. You know, we talked about mortgage banking income and then also the BOLI. You know, we have some BOLI policies that are unwrapped, that are impacted by what's happening in the equity and fixed income markets. You know, going forward, you know, we're thinking we wanna be, you know, roughly in the $10 million per quarter range. And we do have some fee initiatives in the Wealth Management area.
You know, that's an area that's been a little difficult with the volatility. But we have some new business development initiatives in the Wealth Management area that hopefully can offset the market volatility and actually grow fee income in that area. The other thing that's going on is Paul mentioned that we are working on some other Banking-as-a-Service fintech opportunities. Some of those will be fee opportunities versus net interest income opportunities. We look forward to sharing more on that at the appropriate time in the future.
Okay. That's helpful. Thanks, everybody.
Thank you. We have no further questions in the queue, so I'd like to turn the call back to Paul Yonamine for closing remarks.
Thank you very much for participating in our earnings call for the first quarter of 2022. We look forward to future opportunities to update you on our progress. Thank you.
This concludes today's call. Thank you very much for joining. You may now disconnect your lines.