Bank of Hawaii(US:BOH)2023-07-24 19:54Financial Data and Key Metrics Changes - Net interest income was $124.3 million in Q2 2023, a decrease of $11.6 million from the previous quarter [9] - Net interest margin decreased to 2.22%, down 25 basis points from the linked quarter [9] - Earnings per share for the quarter was $1.12, with net income reported at $46.1 million [14][47] - The efficiency ratio was 62.07%, and the return on common equity was 14.95% [47] Business Line Data and Key Metrics Changes - Non-interest income totaled $43.3 million in Q2 2023, with an adjusted figure of $41.7 million, reflecting a $400,000 increase from the previous quarter [24] - The commercial real estate portfolio represents 27% of total loans, with a weighted average loan-to-value of 50% [40] - The allowance for credit losses was $145.4 million, flat at 1.04% of total loans and leases outstanding [41] Market Data and Key Metrics Changes - Total deposits grew during the quarter, with a stable deposit performance noted [14][37] - Hawaii's unemployment rate decreased to 3% in June, down from 3.7% at year-end [38] - Visitor expenditures in May were up 19% from pre-pandemic levels, indicating a recovering tourism sector [38] Company Strategy and Development Direction - The company is focused on expense management and maintaining deposit quality in the current economic environment [4][14] - There is an emphasis on disciplined portfolio management and optimizing the risk profile within the core portfolio [19] - The company plans to maintain its dividend levels while assessing capital needs and earnings retention [71] Management's Comments on Operating Environment and Future Outlook - Management noted that credit quality remains strong, with non-performing assets at 8 basis points and net charge-offs at 4 basis points [14] - The company anticipates continued pressure on non-interest-bearing deposits as rates rise, with a projected deposit beta of 30% by Q4 [22][64] - Future loan growth is expected to be flat, with a cautious outlook on consumer and commercial lending activity [60] Other Important Information - The company added $1.25 billion of fixed-rate term funding at an average rate of 4.3% [10] - The capital ratios remain well above regulatory minimums, with a dividend of $0.70 per common share declared for Q3 2023 [27] Q&A Session Summary Question: What was the cost of funds for the quarter? - The cost of funds for the quarter was 1.08%, with a margin of 2.14% for June [31][51] Question: What is the outlook for non-interest-bearing deposits? - The guidance incorporates a mix shift, with non-interest-bearing deposits expected to decrease to around 26%-27% [64][65] Question: How does the company view its dividend payout? - The company aims to maintain its dividend levels, contingent on earnings and economic conditions [71]