Bank of Hawaii(US:BOH)2020-07-27 22:14Financial Data and Key Metrics Changes - Net income for Q2 2020 was $38.9 million or $0.98 per share, with net interest income reported at $126.7 million, up $700,000 from the previous quarter and up $2.6 million year-over-year [40][41] - The effective tax rate for Q2 was 20.05%, estimated to be approximately 20% to 21% for the remainder of the year [44] - Return on assets was 0.82%, return on equity was 11.58%, and efficiency ratio was 50% [45] Business Line Data and Key Metrics Changes - The loan portfolio net of PPP balances totaled $11.3 billion, with 60% consumer and 40% commercial loans [22] - Non-performing assets totaled $22.7 million, up $2.1 million from Q1 and up $900,000 year-over-year [24] - The second quarter loan growth was 4%, driven by $543 million of PPP loans, with modest growth of $16 million excluding PPP [32] Market Data and Key Metrics Changes - Unemployment in Hawaii rose from 2.4% in March to 23.8% in April, then improved to 13.9% due to partial reopening and federal stimulus [18][20] - GDP and personal income forecasts for 2020 show declines of 11% and 5% respectively [21] Company Strategy and Development Direction - The company continues to focus on digital banking, with significant increases in mobile deposit growth of 36% and online mortgage applications up 142% year-to-date [14] - The company is committed to maintaining solid financial results while fortifying its balance sheet against credit losses [17] - Future investments in digital platforms are expected to generate revenue and improve efficiency [91][92] Management's Comments on Operating Environment and Future Outlook - Management noted that the recovery path is uncertain, with tourism expected to gradually reopen late in Q3 2020 [50] - The company is well-positioned with solid credit statistics and robust liquidity and capital levels [21] - Management expressed cautious optimism about the local economy's resilience, contingent on federal stimulus and the control of infection rates [68][70] Other Important Information - The company provided payment relief to over 17,000 customer accounts, totaling $1.9 billion or 16% of total loans [27] - The investment portfolio increased by $300 million to $6 billion, maintaining high credit quality with 95% in AAA rated securities [37] Q&A Session Summary Question: What are the forecasts for tourism reopening and reserve build? - Management indicated that tourism is expected to open gradually late in Q3, with occupancy levels projected at 40% to 50% of pre-pandemic levels [50][51] Question: How will PPP loans affect liquidity and cash balances? - Management expects PPP loans to run off, with cash deposits decreasing as loans are repaid [52] Question: What is the outlook for non-interest income and service charges? - Non-interest income is expected to be lower due to reduced customer activity, with a potential recovery as economic activity increases [76] Question: How does the company view the resilience of the Hawaiian economy? - Management believes that the local economy can withstand challenges without immediate shutdowns, but full recovery will depend on the resumption of tourism [70] Question: What is the company's strategy regarding digital investments? - The company plans to continue investing in digital platforms to enhance revenue and efficiency, adapting to changing customer behaviors [91][92]