Bank of Hawaii(BOH) - 2025 Q2 - Quarterly Report

Part I - Financial Information Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for Bank of Hawaii Corporation for the periods ended June 30, 2025, and 2024, including detailed notes on accounting policies and financial data Consolidated Statements of Condition Total assets increased to $23.71 billion as of June 30, 2025, driven by available-for-sale investment securities, while total deposits grew to $20.80 billion and shareholders' equity rose to $1.74 billion Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $23,709,752 | $23,601,114 | | Net Loans and Leases | $13,853,635 | $13,927,452 | | Total Investment Securities (AFS & HTM) | $7,552,857 | $7,308,071 | | Total Liabilities | $21,966,645 | $21,933,340 | | Total Deposits | $20,798,914 | $20,633,037 | | Total Shareholders' Equity | $1,743,107 | $1,667,774 | Consolidated Statements of Income Net income for Q2 2025 increased 40% to $47.6 million, with diluted EPS rising to $1.06, primarily due to a 13% increase in net interest income from lower interest expense Q2 2025 vs Q2 2024 Performance (in thousands, except per share) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Interest Income | $129,683 | $114,846 | | Provision for Credit Losses | $3,250 | $2,400 | | Noninterest Income | $44,795 | $42,087 | | Noninterest Expense | $110,783 | $109,226 | | Net Income | $47,637 | $34,083 | | Diluted EPS | $1.06 | $0.81 | H1 2025 vs H1 2024 Performance (in thousands, except per share) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Interest Income | $255,490 | $228,784 | | Provision for Credit Losses | $6,500 | $4,400 | | Noninterest Income | $88,853 | $84,372 | | Noninterest Expense | $221,242 | $215,085 | | Net Income | $91,622 | $70,474 | | Diluted EPS | $2.03 | $1.68 | Consolidated Statements of Cash Flows Net cash provided by operating activities was $100.0 million for the six months ended June 30, 2025, with a net increase in cash and cash equivalents of $5.1 million driven by financing activities offsetting investing outflows Cash Flow Summary - Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $100,000 | $101,064 | | Net Cash (Used in) Provided by Investing Activities | $(142,716) | $421,566 | | Net Cash Provided by (Used in) Financing Activities | $47,828 | $(598,236) | | Net Change in Cash and Cash Equivalents | $5,112 | $(75,606) | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2025 financial results, highlighting a 40% year-over-year increase in net income to $47.6 million, stable balance sheet, sound credit quality, and well-capitalized ratios, while noting caution on Hawai'i's economic outlook Earnings Summary The company reported strong Q2 2025 results with net income of $47.6 million, up 40% YoY, and diluted EPS of $1.06, driven by a 13% increase in net interest income and a 24 basis point expansion in net interest margin to 2.39% - Net income for Q2 2025 was $47.6 million, a 40% increase YoY, with diluted EPS of $1.06[136] - Net interest margin for Q2 2025 was 2.39%, an increase of 24 basis points from Q2 2024[138] - The Board of Directors declared a quarterly cash dividend of $0.70 per common share[139] Analysis of Financial Condition As of June 30, 2025, total assets stood at $23.7 billion, with the investment securities portfolio growing to $7.6 billion, while total loans and leases decreased slightly by 0.5% to $14.0 billion, and total deposits increased by 0.8% to $20.8 billion Loan and Lease Portfolio Balances (in thousands) | Category | June 30, 2025 | Dec 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Commercial | $6,104,126 | $6,125,409 | (0.3)% | | Total Consumer | $7,898,052 | $7,950,571 | (0.7)% | | Total Loans and Leases | $14,002,178 | $14,075,980 | (0.5)% | Deposit Balances (in thousands) | Category | June 30, 2025 | Dec 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Consumer | $10,429,271 | $10,397,777 | 0.3% | | Commercial | $8,243,898 | $8,299,590 | (0.7)% | | Public and Other | $2,125,745 | $1,935,670 | 9.8% | | Total Deposits | $20,798,914 | $20,633,037 | 0.8% | - Adjusted uninsured deposits stood at $7.69 billion as of June 30, 2025, down slightly from $7.73 billion at year-end 2024[182] Corporate Risk Profile The company maintains a robust risk management framework with strong credit quality, non-performing assets at $17.9 million, a stable Allowance for Credit Losses at $148.5 million, strong liquidity with a 132% ratio of readily available liquidity to adjusted uninsured deposits, and capital levels well above regulatory requirements Non-Performing Assets (in thousands) | Category | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Non-Accrual Loans and Leases | $17,539 | $16,643 | | Foreclosed Real Estate | $342 | $2,657 | | Total Non-Performing Assets | $17,881 | $19,300 | | Ratio of NPAs to Total Loans and F.R.E. | 0.13% | 0.14% | Regulatory Capital Ratios | Ratio | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Common Equity Tier 1 Capital Ratio | 11.81% | 11.59% | | Tier 1 Capital Ratio | 14.17% | 13.95% | | Total Capital Ratio | 15.23% | 15.00% | | Tier 1 Leverage Ratio | 8.46% | 8.31% | - The ratio of readily available liquidity to adjusted uninsured deposits was 132% at June 30, 2025, an improvement from 116% at December 31, 2024[226] - The company's Net Interest Income (NII) sensitivity profile as of June 30, 2025, indicates that a +200 basis point parallel rate shock would increase NII by 3.6% ($20.7 million), while a -200 basis point shock would decrease NII by 3.3% ($18.9 million)[219] Quantitative and Qualitative Disclosures About Market Risk This section directs the reader to the 'Market Risk' section within Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, for detailed information on the company's market risk exposures and management strategies - The report refers to the 'Market Risk' section of the MD&A for quantitative and qualitative disclosures about market risk[245] Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes identified in internal control over financial reporting during Q2 2025 - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[246] - There were no changes during the quarter that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[247] Part II - Other Information Legal Proceedings The company reports no pending legal proceedings against it that are likely to have a material adverse effect on its financial position or results of operations - There are no pending legal proceedings expected to have a material adverse effect on the Company's financial position or results[248] Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024, and its Q1 2025 Form 10-Q - No material changes are reported from the risk factors previously disclosed in the 2024 Form 10-K and Q1 2025 Form 10-Q[249] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of its stock during the quarter, repurchasing 4,264 shares at an average price of $67.10 per share for tax withholdings, with $126.0 million remaining under the share repurchase program Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 1 - 30, 2025 | 159 | $65.92 | | May 1 - 31, 2025 | 4,105 | $67.15 | | June 1 - 30, 2025 | — | — | | Total | 4,264 | $67.10 | - The repurchased shares were acquired from employees in connection with income tax withholdings related to the vesting of restricted stock[250] - The remaining buyback authority under the share repurchase program was approximately $126.0 million as of the end of the quarter[250]