Scott Seu: Yes. And the other thing, Jonathan, is we are being very careful in terms of the loans that we are issuing. We have recognized that there is still a need by our customers for funding. But at the same time, we are being fairly selective in the loan book in terms of how we are growing it because again, balancing all these different factors.
Jonathan Reeder: Sure. Okay. That makes sense. I kind of missed it, but what was driving the revision in the Holdco drag, was that just higher interest expense at parent?
Paul Ito: No, this was related to Pacific Current. We are expecting a little bit lower performance this year at one of their projects. There were some equipment issues that continued resulting in the plant being down for a little bit of time. That’s largely been resolved. So – but in effect for the full year, we are expecting a little bit lower or higher net loss related to that.
Jonathan Reeder: Okay. So, that should hopefully be something that, I guess bounces back in ‘24, not having that outage?
Paul Ito: Yes, correct.
Jonathan Reeder: Okay. And then last for me, following up on Julian’s question on the IGP. Is that something that like the commission actually approves and like sets a definitive roadmap for you to follow an approval process to move forward with the CapEx? And then if so, what’s the HPUC’s timeline for approving that IGP?
Shelee Kimura: This is Shelee. So, the IGP was filed or waiting for PUC approval. Our next steps are to file the RFP that builds off of the IGP, we plan to file a draft in September. And our hope is that we can issue the final RFP in March of 2024. With respect to your question about the T&D investments longer term, that would require a separate filing to request approval for that kind of program, but it would be based in the broader master plan of the IGP.
Jonathan Reeder: Okay. So, the commission does give their blessing to the IGP, but you just have these other ways of actually, I guess definitively moving forward projects and maybe setting costs?
Shelee Kimura: Yes, that’s right. And I would also like to add that just a reminder, under PBR, we have our cost recovery. So, there is some level of CapEx that’s already built into the PBR and we get the inflationary increases each year.
Jonathan Reeder: Right. Okay. Great. Thanks for taking my question today.
Shelee Kimura: You’re welcome.
Operator: Our next question is from Ashar Khan with Verition Fund. Your line is now open.
Ashar Khan: Hi. How are you doing, can I just ask a question, so the bank earnings are now expected to be down $0.14 from quarter one guidance. Can you break it down? How much is it NIM related, how much of it is ROE related, or what are the factors, could you help us to then to break down the drop in guidance? What are the factors which lead to the $0.14?
Paul Ito: Yes. Really, the driver is essentially the NIM, right. So, because of the mix shift and higher interest rate environment, that significantly increased our interest expense that we were previously forecasting. And so that resulted in a large compression in our NII. Again, given our first quarter forecast, we weren’t expecting as much of a mix shift and we were expecting deposit – total deposits to be flat to modestly up, whereas now our guidance incorporates continued mix shift for the balance of the year.
Shelee Kimura: Yes. And I would just like to add, too. So, I think banks are all experiencing the similar cost of fund pressure. And I just want to highlight though, with the change in our NIM guidance, we have been managing it while our NIM compression quarter-over-quarter was just 10 [indiscernible] average for peers is more like 20%. So, I think we are trying to be pretty upfront in what we think the impact will be on cost of funds for the remainder of the year. But just know that we are managing it very closely with our deposit pricing and managing that shift in deposits.
