Group 1: Usinas Siderurgicas de Minas Gerais (USNZY) - The company is Latin America's largest flat steel complex and ranks among the world's top twenty steel producers [1] - The Zacks Consensus Estimate for its current year earnings has increased by 50% over the last 60 days [1] - The company has a dividend yield of 4.7%, significantly higher than the industry average of 1.7% [1] Group 2: Bank of Hawaii (BOH) - The bank holding company provides a wide range of products and services in Hawaii, Guam, and other Pacific Islands [2] - The Zacks Consensus Estimate for its current year earnings has increased nearly 10% over the last 60 days [2] - The company has a dividend yield of 4%, which is above the industry average of 3.1% [2] Group 3: Epsilon Energy (EPSN) - The company focuses on on-shore oil and natural gas, engaging in the acquisition, development, gathering, and production of reserves [3] - The Zacks Consensus Estimate for its current year earnings has increased nearly 9.1% over the last 60 days [3] - The company has a dividend yield of 3.7%, compared to the industry average of 2.4% [3]

Core Viewpoint - Bank of Hawaii (BOH) is experiencing solid improvement in earnings estimates, which is likely to positively impact its stock price momentum [1][2]. Earnings Estimates - Analysts are increasingly optimistic about Bank of Hawaii's earnings prospects, leading to higher estimates that should reflect in the stock price [2]. - For the current quarter, the expected earnings per share (EPS) is $1.02, representing an increase of +18.6% from the previous year [6]. - The consensus estimate for the full year is projected at $4.16 per share, indicating a year-over-year change of +17.85% [7]. Estimate Revisions - Over the past 30 days, one estimate has been revised upward for the current quarter, with no negative revisions, resulting in a 6.28% increase in the Zacks Consensus Estimate [6]. - For the current year, three estimates have moved up with no negative revisions, contributing to a positive trend in consensus estimates [7]. Zacks Rank - Bank of Hawaii currently holds a Zacks Rank 2 (Buy), reflecting favorable estimate revisions and a strong potential for outperformance compared to the S&P 500 [8]. - The Zacks Rank system has a proven track record, with Zacks 1 Ranked stocks averaging an annual return of +25% since 2008 [3]. Stock Performance - Bank of Hawaii shares have increased by 13% over the past four weeks, indicating investor confidence in its earnings growth prospects [9].

Financial Performance - Net income for Q1 2025 was $44.0 million, an increase of $7.6 million or 21% compared to Q1 2024[136] - Diluted earnings per common share for Q1 2025 was $0.97, an increase of $0.10 or 11% compared to Q1 2024[136] - Net interest income for Q1 2025 was $125.8 million, an increase of 10% compared to the same period last year[138] - Noninterest income was $44.1 million in Q1 2025, an increase of 4% compared to the same period last year[138] - The return on average common equity for Q1 2025 was 11.80%, compared with 11.20% in Q1 2024[136] - The effective tax rate for Q1 2025 was 21.67%, down from 24.76% in the same period last year[138] Assets and Liabilities - Total assets were $23.9 billion as of March 31, 2025, an increase of 1.2% from December 31, 2024[138] - Total loans and leases were $14.1 billion as of March 31, 2025, an increase of 0.3% from December 31, 2024[138] - Total deposits were $21.0 billion as of March 31, 2025, compared to $20.6 billion as of December 31, 2024[138] - Average balance of earning assets increased by $286.3 million, or 1%, to $22,023.9 million for the three months ended March 31, 2025 compared to the same period last year[144] - Average balance of interest-bearing liabilities increased by $322.9 million, or 2%, to $16,010.1 million for the three months ended March 31, 2025 compared to the same period last year[145] Income and Expense - Total noninterest expense increased by $4.6 million or 4% in Q1 2025 compared to Q1 2024, reaching $110.5 million[152] - Total salaries and benefits expense rose by $4.7 million or 8% in Q1 2025, primarily due to increases in incentive compensation and medical, dental, and life insurance expenses[152] - Net interest income increased by $12.7 million, driven by a change in interest income of $4.8 million and a decrease in interest expense of $7.9 million[142] Credit Quality - Nonperforming assets and accruing loans and leases past due 90 days or more were monitored closely to manage credit risk effectively[183] - The provision for credit losses in Consumer Banking increased by $1 million or 44% due to higher net charge-offs in auto and installment loans[180] - Total Non-Performing Assets decreased to $17.451 million as of March 31, 2025, down from $19.300 million as of December 31, 2024, representing a reduction of $1.849 million or 9.6%[186] - The Allowance for Credit Losses was $147.707 million as of March 31, 2025, or 1.05% of total loans and leases outstanding, compared to $148.528 million or 1.06% as of December 31, 2024[192] Dividends and Shareholder Returns - The Company declared a quarterly cash dividend of $0.70 per share on outstanding common shares, payable on June 13, 2025[138] - No shares of common stock were repurchased in Q1 2025, with a total of 58.2 million shares repurchased since the program's inception, returning $2.4 billion to shareholders[224] Operational Risk Management - The Company has established an Operational Risk Committee (ORC) to oversee and assess significant operational risks, including cybersecurity risks[228] - The Company continuously strengthens its internal controls to minimize operational risks, although there is no assurance that operational losses will not occur[229] - Management's oversight of operational risk is crucial for achieving the Company's goals and objectives[229] Liquidity and Capital - Shareholders' equity increased by $37.2 million (2%) to $1.7 billion as of March 31, 2025, driven by net income of $44.0 million and other comprehensive income of $25.0 million[223] - The ratio of readily available liquidity to uninsured deposits improved to 129% as of March 31, 2025, up from 116% at December 31, 2024, due to increased cash and cash equivalents and borrowing capacity[213] - Total regulatory capital as of March 31, 2025, was $2,144,280 thousand, with a Common Equity Tier 1 Capital Ratio of 11.58%[221]

Financial Performance - Diluted earnings per common share for Q1 2025 were $0.97, up 14.1% from the linked quarter and up 11.5% from the same period last year[3] - Net income for Q1 2025 was $44.0 million, representing a 12.3% increase from the linked quarter and a 20.9% increase year-over-year[3] - Basic earnings per common share increased to $0.98 in Q1 2025, up from $0.86 in Q4 2024 and $0.87 in Q1 2024[32] - Net income for Q1 2025 reached $43,985,000, representing a 12.5% increase from $39,162,000 in Q4 2024 and a 20.9% increase from $36,391,000 in Q1 2024[32] - Net income for the three months ended March 31, 2025, was $43.985 million, compared to $36.391 million for the same period in 2024, representing an increase of 20.5%[46] Income and Expenses - Net interest income for Q1 2025 was $125.8 million, an increase of 4.7% from the linked quarter and 10.4% from the same period last year[4] - Noninterest income was $44.1 million in Q1 2025, a 2.3% increase from the linked quarter and a 4.2% increase year-over-year[8] - Total noninterest income for Q1 2025 was $44,058,000, a slight increase from $43,047,000 in Q4 2024 and $42,285,000 in Q1 2024[32] - Total noninterest expense rose to $110,459,000 in Q1 2025, compared to $107,931,000 in Q4 2024 and $105,859,000 in Q1 2024[32] - The efficiency ratio improved to 65.03% in Q1 2025 from 66.12% in Q4 2024 and 67.76% in Q1 2024[30] Assets and Liabilities - Total assets reached $23.9 billion at March 31, 2025, up 1.2% from December 31, 2024, and up 2.0% from March 31, 2024[16] - Total assets as of March 31, 2025, were $23,885,056,000, an increase from $23,601,114,000 in Q4 2024 and $23,420,860,000 in Q1 2024[30] - Total liabilities stood at $22,180,121 thousand, an increase from $21,933,340 thousand, representing a growth of 1.1%[34] - Shareholders' equity increased to $1,704,935 thousand, up from $1,667,774 thousand, marking a growth of 2.2%[35] Loans and Deposits - Total loans and leases were $14.1 billion at March 31, 2025, an increase of 0.3% from the linked quarter and 1.9% year-over-year[18] - Total deposits amounted to $21.0 billion at March 31, 2025, reflecting a 1.8% increase from December 31, 2024, and a 1.6% increase from March 31, 2024[19] - Total loans and leases increased to $14,115,323 thousand as of March 31, 2025, up from $14,075,980 thousand at December 31, 2024, representing a growth of 0.28%[41] - Total deposits rose to $21,008,217 thousand as of March 31, 2025, compared to $20,633,037 thousand at December 31, 2024, marking an increase of 1.82%[42] Capital Ratios - The Tier 1 Capital Ratio was 13.93% at March 31, 2025, slightly down from 13.95% at December 31, 2024, but up from 12.74% a year ago[21] - The common equity tier 1 capital ratio was 11.58% as of March 31, 2025, slightly down from 11.59% in Q4 2024 but up from 11.50% in Q1 2024[31] Credit Quality - Non-performing assets decreased to $17,451,000 in Q1 2025 from $19,300,000 in Q4 2024, but increased from $11,838,000 in Q1 2024[30] - The ratio of non-performing assets to total assets was 0.07% as of March 31, 2025, unchanged from the previous quarter[44] - The allowance for credit losses decreased to $147,707 thousand from $148,528 thousand, reflecting a reduction of 0.5%[34] - Total provision for credit losses for the first quarter of 2025 was $3.250 million, a decrease from $3.750 million in the previous quarter[45] Market Conditions - The unemployment rate in Hawaii was 2.9% as of March 31, 2025, down from 3.0% in December 2024, indicating a positive trend in the labor market[48]

Loan 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].

Financial Data and Key Metrics Changes - Bank of Hawaii reported net interest income of $120.2 million for Q4 2024, an increase of 2.2% from the previous quarter [22][35] - Net interest margin (NIM) expanded to 2.19%, with a further improvement to 2.26% by December [22][23] - Average deposits grew by 1.3% to $20.8 billion, while average loans increased by 1.1% to $14 billion [6] Business Line Data and Key Metrics Changes - The loan portfolio is balanced with consumer loans representing 56% and commercial loans 44% [12] - Consumer loans are primarily secured against real estate, with a weighted average loan-to-value (LTV) of 48% [13] - Commercial real estate loans account for $4 billion, or 29% of total loans, with a weighted average LTV of 55% [14] Market Data and Key Metrics Changes - Bank of Hawaii maintains the number one position in market share in Hawaii, with stable economic conditions [8][9] - Unemployment in Hawaii remains below the national average, and the residential real estate market trends are positive [10] Company Strategy and Development Direction - The company is focused on enhancing its wealth management operations to match its consumer and commercial business capabilities [75] - Strategic positioning of the balance sheet is aimed at managing interest rate sensitivity effectively [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of credit quality and the potential for continued loan growth, particularly in the commercial sector [51][100] - The company anticipates a diverse range of opportunities for net interest income growth, driven by both loan and deposit growth [100] Other Important Information - Total expenses for Q4 2024 were $107.9 million, with a focus on managing costs effectively [32] - The company declared a dividend of $0.70 per common share for Q1 2025 [38] Q&A Session Summary Question: Is the December margin of 2.26% a good starting point for the first quarter? - Management confirmed that the December margin of 2.26% is a clean number and a good starting point for the first quarter [46] Question: What is the outlook for loan growth and any impact from recent M&A activity? - Management indicated reasonable loan growth expectations, particularly in commercial loans, with no significant changes anticipated from recent M&A activity [50][52] Question: What is the current allocation of the $2 billion of active swaps? - The allocation is approximately $700 million against the available-for-sale (AFS) securities and $1.3 billion against the loan portfolio [82] Question: What initiatives are included in the revenue-enhancing expenses? - Management mentioned initiatives directed at commercial and wealth areas, aimed at enhancing earnings streams [73] Question: What is the outlook for the office loan portfolio due next year? - Management expressed confidence in the renewals of office loans, indicating no issues are expected [62] Question: What would trigger more active share buybacks? - Management indicated that clearer visibility into credit, the economy, and rates would be necessary for considering buybacks [66]

fourth quarter 2024 highlights earnings highlights strong credit credit remained pristine Bank of Hawai'i Corporation fourth quarter 2024 financial report January 27, 2025 disclosure forward-looking statements this presentation, and other statements made by the Company in connection with it, may contain forward-looking statements concerning, among other things, forecasts of our financial results and condition, expectations for our operations and business prospects, and our assumptions used in those forecast ...

Earnings and Net Income - Diluted earnings per common share for the full year 2024 was $3.46, down from $4.14 in 2023, with net income of $150.0 million, a 12.4% decrease year-over-year[2] - Net income for Q4 2024 was $39.2 million, down 3.0% from the linked quarter but up 28.8% from the same period last year[3] - Net Income for Q4 2024 reached $39.16 million, up from $30.40 million in Q4 2023[27] - Net income for the year ended December 31, 2024, was $149.994 million, compared to $171.202 million in 2023[29] - Net Income for 2023 was $171.2 million, compared to $149.994 million in 2024[32] - Net Income for Q4 2024 rose to $39.16 million, compared to $30.40 million in Q4 2023[46] Net Interest Income and Margin - Net interest income for Q4 2024 was $120.2 million, up 2.2% from the linked quarter and 3.8% year-over-year[4] - Net interest margin for Q4 2024 was 2.19%, up 1 basis point from the linked quarter and 6 basis points year-over-year[5] - Net Interest Income for Q4 2024 increased to $120.18 million, up from $115.79 million in Q4 2023[27] - Net interest income for the year ended December 31, 2024, was $466.580 million, compared to $497.025 million in 2023[29] - Net Interest Income rose to $121.5 million in Q4 2024, compared to $118.7 million in Q3 2024 and $116.4 million in Q4 2023[33] - Net Interest Margin improved to 2.19% in Q4 2024, compared to 2.18% in Q3 2024 and 2.13% in Q4 2023[33] - Net interest income declined to $470.4 million in 2024 from $499.0 million in 2023, with a net interest margin of 2.16% compared to 2.24% in 2023[35] - Net Interest Income for Q4 2024 increased to $120.18 million, up from $115.79 million in Q4 2023[46] - Net Interest Margin for Q4 2024 improved to 2.19%, up from 2.13% in Q4 2023[48] Assets and Liabilities - Total assets at year-end 2024 were $23.6 billion, a 0.8% decrease from Q3 2024 and a 0.6% decrease year-over-year[14] - Total loans and leases at year-end 2024 were $14.1 billion, up 1.1% from Q3 2024 and 0.8% year-over-year[16] - Total deposits at year-end 2024 were $20.6 billion, down 1.6% from Q3 2024 and 2.0% year-over-year[17] - Total assets as of December 31, 2024, were $23.601 billion, compared to $23.733 billion in 2023[31] - Loans and leases as of December 31, 2024, were $14.076 billion, compared to $13.965 billion in 2023[31] - Total Earning Assets increased to $22,125.6 million in Q4 2024, up from $21,756.5 million in Q3 2024 and $21,801.9 million in Q4 2023[33] - Total Loans and Leases reached $13,964.7 million in Q4 2024, slightly up from $13,810.0 million in Q3 2024 and $13,906.1 million in Q4 2023[33] - Interest-Bearing Deposits totaled $15,450.8 million in Q4 2024, up from $15,187.2 million in Q3 2024 and $15,008.3 million in Q4 2023[33] - Total Investment Securities stood at $7,307.0 million in Q4 2024, slightly up from $7,211.7 million in Q3 2024 and $7,412.7 million in Q4 2023[33] - Total Interest-Bearing Liabilities were $16,109.3 million in Q4 2024, up from $15,847.8 million in Q3 2024 and $15,719.0 million in Q4 2023[33] - Total Assets as of December 31, 2024, decreased to $23.60 billion from $23.73 billion in 2023[46] - Total Deposits as of December 31, 2024, decreased to $20.63 billion from $21.06 billion in 2023[48] Capital and Equity - Tier 1 Capital Ratio at year-end 2024 was 13.95%, compared to 14.05% in Q3 2024 and 12.56% year-over-year[19] - Common Equity Tier 1 Capital Ratio for Q4 2024 was 11.59%, up from 11.33% in Q4 2023[27] - Tangible Common Equity to Tangible Assets ratio for Q4 2024 was 5.48%, compared to 5.07% in Q4 2023[28] - Total Shareholders' Equity to Total Assets ratio for Q4 2024 was 7.07%, up from 5.96% in Q4 2023[28] - Total Shareholders' Equity increased from $1.316995 billion in 2022 to $1.414242 billion in 2023 and further to $1.667774 billion in 2024[32] - Shareholders' Equity increased to $1,654.2 million in Q4 2024, up from $1,621.9 million in Q3 2024 and $1,360.6 million in Q4 2023[33] Dividends and Shareholder Returns - The Board of Directors declared a quarterly cash dividend of $0.70 per common share, payable on March 14, 2025[20] - Cash Dividends Declared for Common Stock remained consistent at $2.80 per share, totaling $111.795 million in 2023 and $112.313 million in 2024[32] - Cash Dividends Declared for Preferred Stock increased from $7.877 million in 2023 to $12.644 million in 2024[32] - Preferred Stock Issued in 2024 amounted to $160.614 million[32] Non-Performing Assets and Credit Quality - Non-performing assets at year-end 2024 were $19.3 million, down $0.5 million from Q3 2024 but up $7.6 million year-over-year[11] - Non-Performing Assets increased to $19.30 million in Q4 2024 from $11.75 million in Q4 2023[27] - Provision for Credit Losses in Q4 2024 was $3.75 million, higher than $2.50 million in Q4 2023[46] Employee and Compensation Metrics - Full-Time Equivalent Employees decreased to 1,865 in Q4 2024 from 1,899 in Q4 2023[27] - Total salaries and benefits for 2024 were $232.6 million, slightly lower than the $234.1 million in 2023, with medical, dental, and life insurance costs increasing to $14.9 million from $12.8 million[40] Loan and Deposit Portfolio - The loan and lease portfolio grew to $14.08 billion in December 2024, up from $13.97 billion in December 2023, with commercial loans increasing to $6.13 billion from $5.78 billion[41] - Consumer deposits remained stable at $10.40 billion in December 2024, compared to $10.32 billion in December 2023, while commercial deposits decreased to $8.30 billion from $8.60 billion[42] - Average deposits for the three months ended December 2024 were $20.76 billion, slightly higher than the $20.70 billion in the same period of 2023, with consumer deposits averaging $10.33 billion[43] Interest Income and Expense - Total interest income for the year ended December 31, 2024, was $863.751 million, up from $810.375 million in 2023[29] - Total Interest Income for Q4 2024 was $219.22 million, compared to $210.35 million in Q4 2023[48] - Interest expense rose by $83.8 million in 2024, largely due to a $118.0 million increase in interest-bearing deposits, with savings accounts contributing $72.3 million[39] - Total change in interest income for Q4 2024 compared to Q4 2023 was $9.5 million, with $7.1 million from volume and $2.4 million from rate changes[38] - Total change in interest expense for Q4 2024 compared to Q4 2023 was $4.4 million, with $3.5 million from volume and $0.9 million from rate changes[38] - Interest-bearing deposits contributed $5.0 million to the change in interest expense for Q4 2024 compared to Q4 2023, with $4.1 million from volume and $0.9 million from rate changes[38] Efficiency and Performance Ratios - Return on Average Assets for Q4 2024 was 0.66%, compared to 0.51% in Q4 2023[27] - Efficiency Ratio for Q4 2024 improved to 66.12%, down from 73.36% in Q4 2023[48] Comprehensive Income and Other Metrics - Comprehensive income for the year ended December 31, 2024, was $203.293 million, down from $209.172 million in 2023[30] - Other Comprehensive Income increased from $37.97 million in 2023 to $53.299 million in 2024[32] - Share-Based Compensation decreased from $15.656 million in 2023 to $14.444 million in 2024[32] - Common Stock Repurchased decreased from $14.29 million in 2023 to $5.302 million in 2024[32]

[Part I - Financial Information](index=2&type=section&id=Part%20I%20-%20Financial%20Information) Presents the unaudited financial statements and management's analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=2&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements and accompanying notes for the periods ended September 30, 2024 [Consolidated Statements of Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Condition) Details the company's assets, liabilities, and shareholders' equity at the end of the reporting period Consolidated Statements of Condition | (dollars in thousands) | September 30, 2024 | December 31, 2023 | |:-----------------------|:-------------------|:------------------| | Total Assets | $23,799,174 | $23,733,296 | | Total Liabilities | $22,133,700 | $22,319,054 | | Total Shareholders' Equity | $1,665,474 | $1,414,242 | - Total Assets increased by **$65.9 million** (0.28%), Total Liabilities decreased by **$185.4 million** (0.83%), and Total Shareholders' Equity increased by **$251.2 million** (17.76%) from December 31, 2023, to September 30, 2024[5](index=5&type=chunk) [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Reports the company's revenues, expenses, and net income over the reporting period Consolidated Statements of Income | (dollars in thousands, except per share amounts) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:-------------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Total Interest Income | $220,648 | $211,945 | $644,534 | $600,028 | | Total Interest Expense | $103,030 | $91,008 | $298,132 | $218,788 | | Net Interest Income | $117,618 | $120,937 | $346,402 | $381,240 | | Provision for Credit Losses | $3,000 | $2,000 | $7,400 | $6,500 | | Total Noninterest Income | $45,110 | $50,334 | $129,482 | $134,326 | | Total Noninterest Expense | $107,092 | $105,601 | $322,177 | $321,556 | | Net Income | $40,358 | $47,903 | $110,832 | $140,806 | | Basic Earnings Per Common Share | $0.94 | $1.17 | $2.62 | $3.44 | | Diluted Earnings Per Common Share | $0.93 | $1.17 | $2.61 | $3.42 | - Net Income for the three months ended September 30, 2024, decreased by **$7.5 million** (15.75%) compared to the same period in 2023, while for the nine-month period, it decreased by **$30.0 million** (21.29%)[6](index=6&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Outlines net income and other comprehensive income changes, including unrealized gains and losses Consolidated Statements of Comprehensive Income | (dollars in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:-----------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Net Income | $40,358 | $47,903 | $110,832 | $140,806 | | Total Other Comprehensive Income (Loss) | $39,001 | $(18,180) | $61,328 | $(6,953) | | Comprehensive Income | $79,359 | $29,723 | $172,160 | $133,853 | - Comprehensive Income for Q3 2024 significantly increased by **$49.6 million** (167%) year-over-year, driven by unrealized gains on investment securities[7](index=7&type=chunk) - For the nine months ended September 30, 2024, Comprehensive Income increased by **$38.3 million** (28.62%) compared to the same period in 2023[7](index=7&type=chunk) [Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Summarizes the changes in shareholders' equity accounts during the reporting period Consolidated Statements of Shareholders' Equity | (dollars in thousands) | Balance as of Sep 30, 2024 | Balance as of Dec 31, 2023 | |:-----------------------|:---------------------------|:---------------------------| | Preferred Stock Series A | $180,000 | $180,000 | | Preferred Stock Series B | $165,000 | — | | Common Stock | $585 | $583 | | Capital Surplus | $643,620 | $636,422 | | Accumulated Other Comprehensive Loss | $(335,360) | $(396,688) | | Retained Earnings | $2,127,585 | $2,107,569 | | Treasury Stock, at Cost | $(1,115,956) | $(1,113,644) | | Total Shareholders' Equity | $1,665,474 | $1,414,242 | - Total Shareholders' Equity increased by **$251.2 million** (17.76%) from December 31, 2023, to September 30, 2024, primarily due to the issuance of Series B Preferred Stock and an increase in retained earnings[5](index=5&type=chunk)[9](index=9&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Details cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows | (dollars in thousands) | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:-----------------------|:-------------------------------|:-------------------------------| | Net Cash Provided by Operating Activities | $84,936 | $124,570 | | Net Cash Provided by Investing Activities | $245,680 | $463,718 | | Net Cash Used in Financing Activities | $(58,797) | $(337,829) | | Net Change in Cash and Cash Equivalents | $271,819 | $250,459 | | Cash and Cash Equivalents at End of Period | $1,272,763 | $652,226 | - For the nine months ended September 30, 2024, net cash from operating activities decreased by **$39.6 million** (31.82%) and from investing activities by **$218.0 million** (47.02%) year-over-year[10](index=10&type=chunk) - Net cash used in financing activities significantly decreased by **$279.0 million** (82.59%), primarily due to the issuance of preferred stock and reduced debt repayments[10](index=10&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations of the accounting policies and figures in the financial statements [Note 1. Summary of Significant Accounting Policies](index=8&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines the key accounting principles and policies applied in the financial statements - Bank of Hawaii Corporation is a bank holding company providing financial services in Hawai'i and the West Pacific, with unaudited financial statements prepared under U.S. GAAP[11](index=11&type=chunk) - On June 21, 2024, the Company issued **6,600,000 depositary shares** representing Series B Preferred Stock, with net proceeds of **$160.6 million**[12](index=12&type=chunk) [Note 2. Cash and Cash Equivalents](index=8&type=section&id=Note%202.%20Cash%20and%20Cash%20Equivalents) Details the components of the company's cash and cash equivalents Cash and Cash Equivalents | (dollars in thousands) | September 30, 2024 | |:-----------------------|:-------------------| | Interest-Bearing Deposits in Other Banks | $8,287 | | Funds Sold | $992,854 | | Cash and Due From Banks | $271,622 | | Total Cash and Cash Equivalents | $1,272,763 | [Note 3. Investment Securities](index=9&type=section&id=Note%203.%20Investment%20Securities) Provides a breakdown of available-for-sale and held-to-maturity investment securities Investment Securities by Category | (dollars in thousands) | September 30, 2024 Fair Value | December 31, 2023 Fair Value | |:-----------------------|:------------------------------|:-----------------------------| | Available-for-Sale | $2,550,324 | $2,408,933 | | Held-to-Maturity | $4,072,596 | $4,253,637 | | Total | $6,622,920 | $6,662,570 | - As of September 30, 2024, total gross unrealized losses were **$219.7 million** on Available-for-Sale (AFS) securities and **$638.0 million** on Held-to-Maturity (HTM) securities, attributed to interest rate changes rather than credit quality[14](index=14&type=chunk)[17](index=17&type=chunk) Net Gains (Losses) on Sales of Investment Securities | (dollars in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:-----------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Net Gains (Losses) on Sales of Investment Securities | $(1,103) | $(6,734) | $(4,201) | $(9,836) | - Net losses on sales of investment securities decreased by **$5.6 million** for Q3 2024 and by **$5.6 million** for the nine-month period compared to 2023, due to a large realized loss in Q3 2023 and higher fees paid in 2023[15](index=15&type=chunk)[16](index=16&type=chunk) [Note 4. Loans and Leases and the Allowance for Credit Losses](index=12&type=section&id=Note%204.%20Loans%20and%20Leases%20and%20the%20Allowance%20for%20Credit%20Losses) Details the composition of the loan portfolio and the allowance for potential credit losses Loans and Leases and Allowance for Credit Losses | (dollars in thousands) | September 30, 2024 | December 31, 2023 | |:-----------------------|:-------------------|:------------------| | Total Loans and Leases | $13,918,583 | $13,965,026 | | Allowance for Credit Losses | $147,331 | $146,403 | - Total loans and leases decreased by **$46.4 million** (0.33%) from year-end 2023, while the Allowance for Credit Losses increased by **$0.9 million** (0.63%)[5](index=5&type=chunk)[20](index=20&type=chunk) Net Charge-Offs | (dollars in thousands) | Three Months Ended Sep 30, 2024 Net Charged-Off | Three Months Ended Sep 30, 2023 Net Charged-Off | Nine Months Ended Sep 30, 2024 Net Charged-Off | Nine Months Ended Sep 30, 2023 Net Charged-Off | |:-----------------------|:------------------------------------------------|:------------------------------------------------|:-----------------------------------------------|:-----------------------------------------------| | Commercial | $(955) | $(222) | $(1,811) | $(533) | | Consumer | $(2,875) | $(1,827) | $(7,693) | $(5,561) | | Total | $(3,830) | $(2,049) | $(9,504) | $(6,094) | - Net charge-offs increased by **$1.8 million** (86.92%) for Q3 2024 and by **$3.4 million** (55.96%) for the nine-month period compared to 2023, driven by higher charge-offs in both commercial and consumer portfolios[23](index=23&type=chunk) Non-Performing Assets | (dollars in thousands) | September 30, 2024 | December 31, 2023 | |:-----------------------|:-------------------|:------------------| | Total Non-Accrual Loans and Leases | $17,114 | $9,649 | | Total Non-Performing Assets | $19,781 | $11,747 | | Total Accruing Loans and Leases Past Due 90 Days or More | $7,535 | $6,595 | - Non-accrual loans increased by **$7.5 million** (77.37%) from year-end 2023, primarily due to increases in commercial and industrial and residential mortgage non-accrual loans[36](index=36&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - Total Non-Performing Assets increased by **$8.0 million** (68.4%) over the same period[36](index=36&type=chunk)[131](index=131&type=chunk) [Note 5. Mortgage Servicing Rights](index=24&type=section&id=Note%205.%20Mortgage%20Servicing%20Rights) Discusses the valuation and performance of the company's mortgage servicing rights portfolio - The portfolio of residential mortgage loans serviced for third parties was **$2.5 billion** as of September 30, 2024, down from **$2.6 billion** at year-end 2023[50](index=50&type=chunk) - Key valuation assumptions as of September 30, 2024, include a weighted-average constant prepayment rate of **4.20%** and a discount rate of **9.28%**[52](index=52&type=chunk) Mortgage Servicing Rights Balance | (dollars in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:-----------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Balance at End of Period (Amortization Method) | $18,911 | $20,588 | $18,911 | $20,588 | [Note 6. Affordable Housing Projects Tax Credit Partnerships](index=25&type=section&id=Note%206.%20Affordable%20Housing%20Projects%20Tax%20Credit%20Partnerships) Describes investments in affordable housing projects and related tax credit benefits - The Company invests in affordable housing projects using Low-Income Housing Tax Credits (LIHTC) to achieve returns and meet Community Reinvestment Act goals[53](index=53&type=chunk)[55](index=55&type=chunk) Unfunded Commitments | (dollars in thousands) | September 30, 2024 | |:-----------------------|:-------------------| | Total Unfunded Commitments | $105,365 | Tax Benefits Recognized | (dollars in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:-----------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Tax Credits and Other Tax Benefits Recognized (Proportional Amortization Method) | $6,210 | $3,696 | $18,631 | $14,572 | | Amortization Expense in Provision for Income Taxes (Proportional Amortization Method) | $5,348 | $3,203 | $16,044 | $12,630 | [Note 7. Securities Sold Under Agreements to Repurchase](index=27&type=section&id=Note%207.%20Securities%20Sold%20Under%20Agreements%20to%20Repurchase) Details the company's repurchase agreements used for short-term funding Repurchase Agreements | (dollars in thousands) | September 30, 2024 | December 31, 2023 | |:-----------------------|:-------------------|:------------------| | Total Repurchase Agreements | $100,490 | $150,490 | - Securities sold under agreements to repurchase decreased by **$50.0 million** (33.22%) from year-end 2023, as a private institution called a **$50.0 million** agreement in May 2024[58](index=58&type=chunk)[61](index=61&type=chunk)[126](index=126&type=chunk) [Note 8. Accumulated Other Comprehensive Income (Loss)](index=29&type=section&id=Note%208.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Breaks down the components of accumulated other comprehensive income, such as unrealized gains Changes in Accumulated Other Comprehensive Income (Loss) | (dollars in thousands) | Three Months Ended Sep 30, 2024 Net of Tax | Three Months Ended Sep 30, 2023 Net of Tax | Nine Months Ended Sep 30, 2024 Net of Tax | Nine Months Ended Sep 30, 2023 Net of Tax | |:-----------------------|:-------------------------------------------|:-------------------------------------------|:------------------------------------------|:------------------------------------------| | Net Unrealized Gains (Losses) on Investment Securities | $38,833 | $(18,264) | $60,823 | $(7,205) | | Defined Benefit Plans, Net | $168 | $84 | $505 | $252 | | Other Comprehensive Income (Loss) | $39,001 | $(18,180) | $61,328 | $(6,953) | - Total Other Comprehensive Income shifted from a loss of **$18.2 million** in Q3 2023 to a gain of **$39.0 million** in Q3 2024, driven by net unrealized gains on investment securities[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) [Note 9. Earnings Per Common Share](index=32&type=section&id=Note%209.%20Earnings%20Per%20Common%20Share) Presents the calculation of basic and diluted earnings per common share Earnings Per Common Share Calculation | (dollars in thousands, except per share amounts) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:-------------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Net Income Available to Common Shareholders | $36,922 | $45,934 | $103,457 | $134,898 | | Basic Earnings Per Common Share | $0.94 | $1.17 | $2.62 | $3.44 | | Diluted Earnings Per Common Share | $0.93 | $1.17 | $2.61 | $3.42 | - Basic EPS decreased by **$0.23** (19.66%) for Q3 2024 and by **$0.82** (23.84%) for the nine-month period compared to 2023[68](index=68&type=chunk) [Note 10. Business Segments](index=32&type=section&id=Note%2010.%20Business%20Segments) Describes the company's primary operating segments: Consumer, Commercial, and Treasury - The Company operates through three segments: **Consumer Banking**, **Commercial Banking**, and **Treasury and Other**[69](index=69&type=chunk) - Consumer Banking offers a broad range of financial products and services to individuals and small businesses[69](index=69&type=chunk)[70](index=70&type=chunk) - Commercial Banking provides lending, deposit, and cash management services to middle-market companies, large corporations, and government entities[70](index=70&type=chunk) - Treasury and Other manages corporate asset and liability, interest rate risk, and foreign currency exchange[70](index=70&type=chunk) [Note 11. Derivative Financial Instruments](index=35&type=section&id=Note%2011.%20Derivative%20Financial%20Instruments) Outlines the use of derivative instruments for hedging and customer service purposes Derivative Financial Instruments | (dollars in thousands) | September 30, 2024 Notional Amount | September 30, 2024 Fair Value | December 31, 2023 Notional Amount | December 31, 2023 Fair Value | |:-----------------------|:-----------------------------------|:------------------------------|:----------------------------------|:-----------------------------| | Derivatives designated as hedging instruments (Interest Rate Swap Agreements) | $2,800,000 | $(40,563) | $3,000,000 | $(48,672) | | Derivatives not designated as hedging instruments (Total) | $4,238,301 | $152 | $4,249,948 | $(164) | - The Company uses derivatives to manage market risks and assist customers, with fair value hedges used for AFS investment securities and fixed-rate loans[73](index=73&type=chunk)[81](index=81&type=chunk) - Makewhole agreements related to Visa Class B shares were valued at zero as of September 30, 2024, as the likelihood of payment was not reasonably estimable[80](index=80&type=chunk) [Note 12. Commitments and Contingencies](index=37&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) Discloses off-balance sheet commitments, letters of credit, and potential legal contingencies Credit Commitments | (dollars in thousands) | September 30, 2024 | December 31, 2023 | |:-----------------------|:-------------------|:------------------| | Unfunded Commitments to Extend Credit | $3,175,339 | $3,433,061 | | Standby Letters of Credit | $94,841 | $88,512 | | Commercial Letters of Credit | $11,248 | $16,551 | | Total Credit Commitments | $3,281,428 | $3,538,124 | - Total credit commitments decreased by **$256.7 million** (7.25%) from year-end 2023, primarily due to a decrease in unfunded commitments to extend credit[82](index=82&type=chunk) - The Company is subject to various legal proceedings and establishes reserves for probable losses, believing the eventual outcome will not materially exceed reserved amounts[83](index=83&type=chunk) [Note 13. Fair Value of Assets and Liabilities](index=38&type=section&id=Note%2013.%20Fair%20Value%20of%20Assets%20and%20Liabilities) Explains the methodology for measuring assets and liabilities at fair value - Fair value is measured using a three-level hierarchy: **Level 1** (quoted prices), **Level 2** (observable inputs), and **Level 3** (unobservable inputs)[84](index=84&type=chunk) - Mortgage Servicing Rights and Interest Rate Lock Commitments are classified as **Level 3** measurements due to the use of significant unobservable inputs[86](index=86&type=chunk)[87](index=87&type=chunk)[93](index=93&type=chunk) Assets and Liabilities Measured at Fair Value | (dollars in thousands) | September 30, 2024 Fair Value | December 31, 2023 Fair Value | |:-----------------------|:------------------------------|:-----------------------------| | Total Assets Measured at Fair Value on a Recurring Basis | $2,650,428 | $2,521,252 | | Total Liabilities Measured at Fair Value on a Recurring Basis | $115,092 | $143,857 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's analysis of financial condition, results of operations, and key risk factors [Forward-Looking Statements](index=43&type=section&id=Forward-Looking%20Statements) Cautions readers about statements concerning future performance and associated risks - The report contains forward-looking statements based on assumptions and subject to various risks and uncertainties, including economic conditions, interest rate changes, and regulatory initiatives[101](index=101&type=chunk) [Investor Announcements](index=45&type=section&id=Investor%20Announcements) Details the channels used for disseminating material information to investors - The Company uses its investor relations website, social media, press releases, and SEC filings to disclose financial and other information in compliance with Regulation FD[102](index=102&type=chunk) [Critical Accounting Policies](index=45&type=section&id=Critical%20Accounting%20Policies) Confirms no significant changes to critical accounting policies since the last annual report - No significant changes in critical accounting policies, which require estimates and judgments in accordance with GAAP, have occurred since December 31, 2023[103](index=103&type=chunk) [Overview](index=45&type=section&id=Overview) Summarizes the company's business, market focus, and strategic objectives - Bank of Hawaii Corporation is a regional financial services company serving Hawai'i and the Pacific Islands, focusing on balancing growth with prudent risk management[104](index=104&type=chunk) [Hawai'i Economy](index=45&type=section&id=Hawai'i%20Economy) Provides an overview of the economic conditions in Hawai'i, the company's primary market - Hawai'i's economy is favorable, with a strong visitor industry, high construction activity, and an unemployment rate of **2.9%** in September 2024, below the U.S. rate of 4.1%[105](index=105&type=chunk) - For the first nine months of 2024, Oahu's median single-family home prices increased by **4.8%** year-over-year, while sales volume increased by **5.8%**[105](index=105&type=chunk) [Earnings Summary](index=45&type=section&id=Earnings%20Summary) Presents a high-level summary of the company's financial performance for the quarter Q3 2024 Financial Highlights | Metric | Q3 2024 | Q3 2023 | Change (YoY) | |:-------|:--------|:--------|:-------------| | Net Income | $40.4M | $47.9M | -16% | | Diluted EPS | $0.93 | $1.17 | -21% | | Return on Average Common Equity | 11.50% | 15.38% | -3.88 pp | | Net Interest Income | $117.6M | $120.9M | -3% | | Net Interest Margin | 2.18% | 2.13% | +5 bps | | Provision for Credit Losses | $3.0M | $2.0M | +$1.0M | | Noninterest Income | $45.1M | $50.3M | -10% | | Noninterest Expense | $107.1M | $105.6M | +1% | | Effective Tax Rate | 23.33% | 24.76% | -1.43 pp | - Total assets were **$23.8 billion** as of September 30, 2024, with total loans and leases at **$13.9 billion** and the allowance for credit losses at **$147.3 million** (1.06% of loans)[106](index=106&type=chunk) - Total shareholders' equity increased by **18%** to **$1.7 billion** due to the issuance of Series B Preferred Stock, with **$126.0 million** remaining in buyback authority[106](index=106&type=chunk) [Analysis of Unaudited Statements of Income](index=47&type=section&id=Analysis%20of%20Unaudited%20Statements%20of%20Income) Provides a detailed breakdown and analysis of the income statement components [Net Interest Income](index=48&type=section&id=Net%20Interest%20Income) Analyzes the key drivers of net interest income, including margin and asset yields Net Interest Income Summary | (dollars in millions) | Q3 2024 | Q3 2023 | Change (YoY) | |:----------------------|:--------|:--------|:-------------| | Net Interest Income | $117.6 | $120.9 | $(3.3) | | Interest Rate Spread | 1.47% | 1.54% | -7 bps | | Net Interest Margin | 2.18% | 2.13% | +5 bps | - Net interest income decreased by **$3.3 million** (2.73%) in Q3 2024 year-over-year, while net interest margin increased by **5 basis points** to 2.18%[108](index=108&type=chunk)[111](index=111&type=chunk) - The cost of interest-bearing liabilities increased by **41 basis points** in Q3 2024, driven by customer migration to higher-rate deposit products[111](index=111&type=chunk) [Noninterest Income](index=48&type=section&id=Noninterest%20Income) Details the sources of noninterest income and explains period-over-period changes Noninterest Income Breakdown | (dollars in thousands) | Q3 2024 | Q3 2023 | Change (YoY) | |:-----------------------|:--------|:--------|:-------------| | Fees, Exchange, and Other Service Charges | $14,945 | $13,824 | +$1,121 | | Trust and Asset Management | $11,916 | $10,548 | +$1,368 | | Bank-Owned Life Insurance | $3,533 | $2,749 | +$784 | | Investment Securities Losses, Net | $(1,103)| $(6,734)| +$5,631 | | Other Income | $5,096 | $19,889 | $(14,793) | | Total Noninterest Income | $45,110 | $50,334 | $(5,224) | - Total noninterest income decreased by **$5.2 million** (10.38%) in Q3 2024, primarily due to a **$14.7 million** gain on extinguishments of repurchase agreements in 2023[111](index=111&type=chunk)[112](index=112&type=chunk) - Trust assets under management increased to **$13.0 billion** as of September 30, 2024, from **$10.6 billion** a year prior[111](index=111&type=chunk) [Noninterest Expense](index=50&type=section&id=Noninterest%20Expense) Breaks down noninterest expenses and discusses the reasons for any significant fluctuations Noninterest Expense Breakdown | (dollars in thousands) | Q3 2024 | Q3 2023 | Change (YoY) | |:-----------------------|:--------|:--------|:-------------| | Total Salaries and Benefits | $58,626 | $58,825 | $(199) | | Net Occupancy | $10,806 | $10,327 | +$479 | | Net Equipment | $10,120 | $9,477 | +$643 | | Professional Fees | $4,725 | $3,846 | +$879 | | FDIC Insurance | $3,355 | $3,361 | $(6) | | Total Other Expense | $14,748 | $15,059 | $(311) | | Total Noninterest Expense | $107,092| $105,601| +$1,491 | - Total noninterest expense increased by **$1.5 million** (1.41%) in Q3 2024 year-over-year, driven by higher net occupancy, equipment, and professional fees[113](index=113&type=chunk) - For the nine-month period, FDIC insurance expense increased by **$4.4 million** (45%) due to an industry-wide special assessment[113](index=113&type=chunk) [Provision for Income Taxes](index=50&type=section&id=Provision%20for%20Income%20Taxes) Explains the calculation of the income tax provision and the effective tax rate Income Tax Provision | (dollars in thousands) | Q3 2024 | Q3 2023 | Change (YoY) | |:-----------------------|:--------|:--------|:-------------| | Provision for Income Taxes | $12,278 | $15,767 | $(3,489) | | Effective Tax Rate | 23.33% | 24.76% | -1.43 pp | - The provision for income taxes decreased by **$3.5 million** (22.13%) in Q3 2024, with the effective tax rate falling to **23.33%** from 24.76% due to an increase in tax-exempt income[114](index=114&type=chunk)[115](index=115&type=chunk) [Analysis of Unaudited Statements of Condition](index=51&type=section&id=Analysis%20of%20Unaudited%20Statements%20of%20Condition) Provides a detailed analysis of key balance sheet accounts and their changes [Investment Securities](index=51&type=section&id=Investment%20Securities) Discusses the composition and performance of the investment securities portfolio - The carrying value of the investment securities portfolio decreased to **$7.3 billion** as of September 30, 2024, from **$7.4 billion** at year-end 2023[115](index=115&type=chunk) - Net unrealized losses in the portfolio improved to **$0.9 billion** as of September 30, 2024, from **$1.0 billion** at year-end 2023[115](index=115&type=chunk) [Loans and Leases](index=51&type=section&id=Loans%20and%20Leases) Analyzes the growth and composition of the commercial and consumer loan portfolios Loans and Leases by Type | (dollars in thousands) | September 30, 2024 | December 31, 2023 | Change (YoY) | |:-----------------------|:-------------------|:------------------|:-------------| | Total Commercial Loans and Leases | $5,930,074 | $5,777,486 | +$152,588 | | Total Consumer Loans and Leases | $7,988,509 | $8,187,540 | $(199,031) | | Total Loans and Leases | $13,918,583 | $13,965,026 | $(46,443) | - Total loans and leases decreased by **$46.4 million** (0.33%) from year-end 2023, as a **$199.0 million** decrease in consumer loans offset a **$152.6 million** increase in commercial loans[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) [Other Assets](index=53&type=section&id=Other%20Assets) Details the components and changes within the 'Other Assets' category on the balance sheet Other Assets Breakdown | (dollars in thousands) | September 30, 2024 | December 31, 2023 | Change (YoY) | |:-----------------------|:-------------------|:------------------|:-------------| | Low-Income Housing and Other Equity Investments | $221,255 | $208,858 | +$12,397 | | Deferred Tax Assets | $163,996 | $183,691 | $(19,695) | | Derivative Financial Instruments | $74,414 | $95,069 | $(20,655) | | Deferred Compensation Plan Assets | $19,982 | $13,448 | +$6,534 | | Total Other Assets | $620,355 | $639,458 | $(19,103) | - Total other assets decreased by **$19.1 million** (2.99%) from year-end 2023, primarily due to decreases in deferred tax assets and derivative financial instruments[120](index=120&type=chunk) [Deposits](index=53&type=section&id=Deposits) Analyzes deposit trends by type and customer segment Deposits by Customer Type | (dollars in thousands) | September 30, 2024 | December 31, 2023 | Change (YoY) | |:-----------------------|:-------------------|:------------------|:-------------| | Consumer Deposits | $10,340,466 | $10,319,809 | +$20,657 | | Commercial Deposits | $8,356,239 | $8,601,224 | $(244,985) | | Public and Other Deposits | $2,281,617 | $2,134,012 | +$147,605 | | Total Deposits | $20,978,322 | $21,055,045 | $(76,723) | - Total deposits decreased by **$76.7 million** (0.36%) from year-end 2023, as a **$245.0 million** decrease in commercial deposits was partially offset by growth in consumer and public deposits[121](index=121&type=chunk) Savings Deposits by Type | (dollars in thousands) | September 30, 2024 | December 31, 2023 | Change (YoY) | |:-----------------------|:-------------------|:------------------|:-------------| | Money Market | $3,595,930 | $3,258,631 | +$337,299 | | Regular Savings | $5,067,217 | $4,930,841 | +$136,376 | | Total Savings Deposits | $8,663,147 | $8,189,472 | +$473,675 | - Total savings deposits increased by **$473.7 million** (5.78%) from year-end 2023, driven by growth in money market and regular savings accounts[122](index=122&type=chunk) [Securities Sold Under Agreements to Repurchase](index=54&type=section&id=Securities%20Sold%20Under%20Agreements%20to%20Repurchase) Explains the changes in repurchase agreements used for funding Repurchase Agreements by Counterparty | (dollars in thousands) | September 30, 2024 | December 31, 2023 | Change (YoY) | |:-----------------------|:-------------------|:------------------|:-------------| | Private Institutions | $100,000 | $150,000 | $(50,000) | | Government Entities | $490 | $490 | $0 | | Total | $100,490 | $150,490 | $(50,000) | - Securities sold under agreements to repurchase decreased by **$50.0 million** (33.22%) from year-end 2023 after a private institution exercised a call option[124](index=124&type=chunk)[126](index=126&type=chunk) [Other Debt](index=54&type=section&id=Other%20Debt) Details the composition of other debt, including FHLB advances and lease obligations Other Debt Breakdown | (dollars in thousands) | September 30, 2024 | December 31, 2023 | Change (YoY) | |:-----------------------|:-------------------|:------------------|:-------------| | Federal Home Loan Bank of Des Moines Advances | $550,000 | $550,000 | $0 | | Finance Lease Obligations | $8,297 | $10,190 | $(1,893) | | Total | $558,297 | $560,190 | $(1,893) | - Total other debt decreased by **$1.9 million** (0.34%) from year-end 2023 due to a decrease in finance lease obligations[127](index=127&type=chunk) [Analysis of Business Segments](index=55&type=section&id=Analysis%20of%20Business%20Segments) Reviews the financial performance of the Consumer, Commercial, and Treasury segments [Consumer Banking](index=55&type=section&id=Consumer%20Banking) Reports the financial results and key drivers for the Consumer Banking segment Consumer Banking Net Income | (dollars in thousands) | Q3 2024 | Q3 2023 | Change (YoY) | |:-----------------------|:--------|:--------|:-------------| | Net Income | $32,993 | $34,587 | $(1,594) | - Consumer Banking net income decreased by **$1.6 million** (4.61%) in Q3 2024 year-over-year, due to higher expenses and credit provisions[129](index=129&type=chunk) [Commercial Banking](index=55&type=section&id=Commercial%20Banking) Reports the financial results and key drivers for the Commercial Banking segment Commercial Banking Net Income | (dollars in thousands) | Q3 2024 | Q3 2023 | Change (YoY) | |:-----------------------|:--------|:--------|:-------------| | Net Income | $28,929 | $31,015 | $(2,086) | - Commercial Banking net income decreased by **$2.1 million** (6.73%) in Q3 2024 year-over-year, mainly due to lower net interest and noninterest income[129](index=129&type=chunk) [Treasury and Other](index=55&type=section&id=Treasury%20and%20Other) Reports the financial results for the Treasury and Other segment Treasury and Other Net Income (Loss) | (dollars in thousands) | Q3 2024 | Q3 2023 | Change (YoY) | |:-----------------------|:--------|:--------|:-------------| | Net Income (Loss) | $(21,564)| $(17,699)| $(3,865) | - Treasury and Other net loss increased by **$3.9 million** in Q3 2024 year-over-year, primarily due to lower noninterest income compared to gains in Q3 2023[130](index=130&type=chunk) [Corporate Risk Profile](index=56&type=section&id=Corporate%20Risk%20Profile) Outlines the company's approach to managing credit, market, liquidity, and operational risks [Credit Risk](index=56&type=section&id=Credit%20Risk) Analyzes key credit quality indicators, including non-performing assets and charge-offs Credit Quality Indicators | (dollars in thousands) | September 30, 2024 | December 31, 2023 | Change (YoY) | |:-----------------------|:-------------------|:------------------|:-------------| | Total Non-Accrual Loans and Leases | $17,114 | $9,649 | +$7,465 | | Total Non-Performing Assets | $19,781 | $11,747 | +$8,034 | | Total Accruing Loans and Leases Past Due 90 Days or More | $7,535 | $6,595 | +$940 | | Ratio of Non-Performing Assets to Total Loans and Leases and Foreclosed Real Estate | 0.14% | 0.08% | +0.06 pp | - Non-accrual loans increased by **$7.5 million** (77%) from year-end 2023, mainly due to commercial and industrial and residential mortgage loans[131](index=131&type=chunk)[132](index=132&type=chunk) Allowance for Credit Losses Activity | (dollars in thousands) | Q3 2024 Net Charged-Off | Q3 2023 Net Charged-Off | YTD Q3 2024 Net Charged-Off | YTD Q3 2023 Net Charged-Off | |:-----------------------|:------------------------|:------------------------|:----------------------------|:----------------------------| | Net Charged-Off - Loans and Leases | $(3,830) | $(2,049) | $(9,504) | $(6,094) | | Provision for Credit Losses | $3,000 | $2,000 | $7,400 | $6,500 | | Allowance for Credit Losses - Loans and Leases | $147,331 | $145,263 | $147,331 | $145,263 | | Ratio of Allowance for Credit Losses to Loans and Leases Outstanding | 1.06% | 1.04% | 1.06% | 1.04% | - Net charge-offs increased to **$3.8 million** (0.11% annualized) in Q3 2024 from **$2.0 million** (0.06% annualized) in Q3 2023[133](index=133&type=chunk) - The Allowance for Credit Losses was **$147.3 million**, or **1.06%** of total loans, as of September 30, 2024[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) [Market Risk](index=59&type=section&id=Market%20Risk) Discusses the company's exposure to interest rate risk and its management strategies - The Company's primary market risk is interest rate risk, managed through Net Interest Income (NII) and Economic Value of Equity (EVE) sensitivity guidelines[135](index=135&type=chunk)[136](index=136&type=chunk) Net Interest Income Sensitivity | (dollars in thousands) | September 30, 2024 Impact on Future Annual Net Interest Income | December 31, 2023 Impact on Future Annual Net Interest Income | |:-----------------------|:---------------------------------------------------------------|:--------------------------------------------------------------| | +400 bps | $60,576 (11.6%) | $109,909 (21.6%) | | +200 bps | $33,245 (6.4%) | $59,228 (11.6%) | | -200 bps | $(41,298) (7.9%) | $(64,601) (12.7%) | - NII sensitivity to interest rate changes was less sensitive as of September 30, 2024, compared to year-end 2023, due to an increase in assumed deposit repricing sensitivity[139](index=139&type=chunk)[141](index=141&type=chunk) [Liquidity Risk Management](index=61&type=section&id=Liquidity%20Risk%20Management) Details the company's liquidity position, funding sources, and borrowing capacity - As of September 30, 2024, the Company had **$7.2 billion** in remaining borrowing capacity at the Federal Reserve Discount Window and **$1.9 billion** at the FHLB Des Moines[141](index=141&type=chunk) - Other liquidity sources include **$2.6 billion** in AFS investment securities, the ability to sell loans, and core deposits[144](index=144&type=chunk)[145](index=145&type=chunk) [Capital Management](index=62&type=section&id=Capital%20Management) Reviews the company's capital adequacy, regulatory ratios, and capital return strategies - The Company actively manages capital to exceed 'well-capitalized' regulatory thresholds[145](index=145&type=chunk) Regulatory Capital Ratios | (dollars in thousands) | September 30, 2024 | December 31, 2023 | |:-----------------------|:-------------------|:------------------| | Common Equity Tier 1 Capital Ratio | 11.66% | 11.33% | | Tier 1 Capital Ratio | 14.05% | 12.56% | | Total Capital Ratio | 15.11% | 13.60% | | Tier 1 Leverage Ratio | 8.38% | 7.51% | - Shareholders' equity increased by **$251.2 million** (18%) to **$1.7 billion** as of September 30, 2024, with remaining buyback authority at **$126.0 million**[147](index=147&type=chunk) [Operational Risk](index=63&type=section&id=Operational%20Risk) Describes the framework for managing operational risks across the organization - Operational risk is managed through the Operational Risk Committee (ORC), which provides oversight for losses arising from internal processes, people, systems, or external events[148](index=148&type=chunk) [Off-Balance Sheet Arrangements, Credit Commitments, and Contractual Obligations](index=63&type=section&id=Off-Balance%20Sheet%20Arrangements%2C%20Credit%20Commitments%2C%20and%20Contractual%20Obligations) Discloses off-balance sheet arrangements and confirms no material changes to commitments - The Company holds interests in unconsolidated VIEs, primarily low-income housing partnerships, and confirms no material changes to credit commitments since year-end 2023[148](index=148&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=63&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Refers to the Market Risk section within the MD&A for detailed disclosures - Information regarding market risk is incorporated by reference from the "Market Risk" section of Management's Discussion and Analysis[149](index=149&type=chunk) [Item 4. Controls and Procedures](index=63&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and internal controls over financial reporting - Management concluded that disclosure controls and procedures were **effective** as of September 30, 2024[149](index=149&type=chunk) - There were **no material changes** in the Company's internal control over financial reporting during the quarter[149](index=149&type=chunk) [Part II - Other Information](index=64&type=section&id=Part%20II%20-%20Other%20Information) Contains other required information, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) Incorporates by reference the disclosure on legal proceedings from the financial statement notes - Information regarding legal proceedings is incorporated by reference from "Contingencies" in Note 12 to the Consolidated Financial Statements[150](index=150&type=chunk) [Item 1A. Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) States there are no material changes to risk factors from the latest Annual Report - There are **no material changes** from the risk factors set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2023[150](index=150&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=65&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details common stock repurchases and the remaining buyback authority Share Repurchases in Q3 2024 | Period | Total Number of Shares Purchased | Average Price Paid Per Share | |:-----------------------|:---------------------------------|:-----------------------------| | July 1 - 31, 2024 | 1,246 | $56.18 | | August 1 - 31, 2024 | 380 | $68.22 | | September 1 - 30, 2024 | 792 | $63.13 | | Total | 2,418 | $60.35 | - During Q3 2024, **2,418 shares** were acquired from employees for income tax withholdings and by the Director Deferred Compensation Plan trustee[151](index=151&type=chunk) - The remaining buyback authority under the share repurchase program was **$126.0 million** as of September 30, 2024[151](index=151&type=chunk) [Item 5. Other Information](index=65&type=section&id=Item%205.%20Other%20Information) Confirms no new or terminated Rule 10b5-1 trading plans by executives - During the fiscal quarter, none of the Company's directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangements[151](index=151&type=chunk) [Item 6. Exhibits](index=67&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q report - A list of exhibits to this Form 10-Q, including corporate governance documents and officer certifications, is set forth on the Exhibit Index[153](index=153&type=chunk) [Signatures](index=68&type=section&id=Signatures) Contains the certifying signatures of the CEO and CFO - The report is duly signed on October 28, 2024, by the Chairman and CEO, and the Vice Chair and CFO, on behalf of Bank of Hawaii Corporation[154](index=154&type=chunk)

Bank of Hawaii Corporation (NYSE:BOH) Q3 2024 Earnings Call Transcript October 28, 2024 2:00 PM ET Company Participants Chang Park - SVP, IR Director Peter Ho - Chairman and CEO Bradley Shairson - CRO Dean Shigemura - CFO James Polk - President and Chief Banking Officer Conference Call Participants Jeff Rulis - D. A. Davidson Jared Shaw - Barclays Andrew Liesch - Piper Sandler Kelly Motta - KBW Operator Good day and thank you for standing by. Welcome to the Bank of Hawaii Corporation Third Quarter 2024 Earn ...