Bank of Hawaii(US:BOH)2025-03-04 00:10Loan Portfolio and Credit Quality - The company's loan portfolio is significantly secured by real estate, with residential mortgage loans totaling $4.6 billion (32.9% of total loans) and commercial mortgage loans at approximately $4.0 billion (28.6% of total loans) as of December 31, 2024[64]. - Non-performing assets were reported at $19.3 million, or 0.14% of total loans and leases, while criticized loans amounted to $296.2 million, or 2.10% of total loans and leases as of December 31, 2024[75]. - The company's loans and leases portfolio totaled $14.1 billion with an allowance for credit losses of $148.5 million as of December 31, 2024[331]. - The total loans and leases as of December 31, 2024, amounted to $14,075.9 million, an increase from $13,965.0 million in 2023, reflecting a growth of approximately 0.79%[441]. - The total commercial loans reached $6,125.4 million in 2024, up from $5,777.48 million in 2023, representing an increase of about 6%[441]. - Consumer loans totaled $7,950.57 million in 2024, compared to $8,187.54 million in 2023, showing a decrease of approximately 2.9%[441]. - Residential mortgage loans were $4,628.28 million in 2024, slightly down from $4,684.17 million in 2023, a decline of about 1.2%[441]. - The total amount of classified residential mortgage loans was $3,995,000[436]. - The company reported a total of 9,566 non-accrual loans in the consumer segment for 2024, compared to 6,726 in 2023, marking an increase of approximately 42%[443]. Economic and Regulatory Environment - The company is closely monitoring the economic conditions in Hawaiʻi and the West Pacific, as these factors significantly impact loan origination and repayment capabilities[63]. - A prolonged period of high inflation could adversely affect the company's profitability and operational costs, particularly due to the reliance on imported goods[66]. - The company faces risks from potential reductions in U.S. military spending, which is a critical component of the economies in Hawaiʻi and the West Pacific[70]. - Changes in interest rates are expected to influence the company's earnings, as they affect the spread between interest earned on loans and interest paid on deposits[71]. - The Company is subject to extensive regulation by federal bank regulatory agencies, which affects its lending practices, capital structure, and growth[85]. - Increased compliance costs due to the Dodd-Frank Act and other consumer protection laws may adversely affect the Company's financial condition[86]. - The Company is evaluating the potential impact of regulatory proposals on its liquidity and capital management strategies, particularly those under the Dodd-Frank Act[83]. Financial Performance - Net income for 2024 was $149.99 million, a decrease of 12.3% compared to $171.20 million in 2023[338]. - Total interest income increased to $863.8 million in 2024, up from $810.4 million in 2023, reflecting a growth of approximately 6.6%[337]. - The net interest income after provision for credit losses was $455.43 million in 2024, down from $488.03 million in 2023, a decrease of approximately 6.7%[337]. - Basic earnings per common share decreased to $3.48 in 2024 from $4.16 in 2023, a decline of about 16.4%[337]. - Total assets decreased slightly to $23.60 billion in 2024 from $23.73 billion in 2023[336]. - Total deposits fell to $20.63 billion in 2024, down from $21.06 billion in 2023, representing a decline of about 2.0%[336]. - The provision for credit losses was $11.15 million in 2024, compared to $9 million in 2023, indicating a rise of approximately 23.9%[337]. Dividends and Shareholder Equity - The company paid cash dividends of $112.3 million on common shares during 2024, with a quarterly cash dividend of $0.70 per share declared in January 2025[82]. - The company’s ability to declare dividends is subject to regulatory limitations and the financial performance of the bank[81]. - Total shareholders' equity increased to $1.67 billion in 2024 from $1.41 billion in 2023, reflecting a growth of approximately 18.0%[336]. Risk Management and Compliance - The company has expressed concerns regarding the impact of climate change on its operations and the financial condition of its customers, which could lead to increased credit losses[68]. - Cybersecurity threats and attacks pose significant risks to the Company's operations and could result in financial losses and reputational damage[100]. - The Company is subject to greater regulatory scrutiny, which could lead to increased costs and potential reputational harm if compliance is not met[87]. - Changes in capital, leverage, and liquidity requirements could materially affect the Company's future operations and ability to conduct certain activities[91]. - The Company may face penalties or be required to repurchase mortgages if it fails to meet servicing obligations or if servicing standards change[106]. Investment Securities - As of December 31, 2024, the total fair value of the company's investment securities was $2.69 billion, with an amortized cost of $2.95 billion, resulting in gross unrealized losses of $259.14 million[419]. - The company reported net losses on sales of investment securities amounting to $7.51 million for the year ended December 31, 2024, compared to net losses of $11.46 million in 2023[423]. - The company's held-to-maturity investment securities had a total fair value of $3.82 billion as of December 31, 2024, with an amortized cost of $4.62 billion, reflecting gross unrealized losses of $743.73 million[421]. - The company does not believe that the unrealized losses in AFS debt securities represent credit loss impairment, as they are primarily due to interest rate changes[424]. - The company intends to hold the investment securities in unrealized loss positions until recovery of their amortized cost basis, indicating a long-term investment strategy[424]. Loan Modifications and Foreclosures - Loan modifications for borrowers experiencing financial difficulty included term extensions and interest rate reductions, aimed at minimizing economic loss[446]. - The company continues to focus on strategies to manage non-accrual loans and enhance loan performance through various modification options[446]. - Foreclosure proceedings for consumer mortgage loans totaled $6.8 million as of December 31, 2024, compared to $4.9 million in 2023[454].