Bank Of Hawaii Corporation · NYSE:BOH
Bank Of Hawaii — Q1 2024 Earnings Presentation
43 slides from Bank Of Hawaii's earnings presentation, Apr 22, 2024
Slide 1: First quarter 2024 financial report
Bank of Hawai‘i Corporation first quarter 2024 financial report April 22, 2024
Slide 2: Disclosure: forward-looking statements
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, an
Slide 3: Highlights
highlights • $0.87 diluted earnings per common share earnings highlights • 1.74% average cost of total deposits • 11.20% return on average common equity • 0.07% net charge-off rate • 0.09% non-performing assets level • 79% of loan portfolio real-estate secured with combined wtd avg LTV of 52% strong
Slide 4: Highlights – balance sheet
highlights – balance sheet $ in billions stable average total deposits stable average total loans and leases $13.7 $13.9 $13.9 $20.4 $20.7 $20.5 3/31/23 12/31/23 3/31/24 3/31/23 12/31/23 3/31/24 increased readily available liquidity organic capital growth 12.74% $10.2 $10.3 12.56% 12.10% $7.9 3/31/2
Slide 5: Our deposits
our deposits through our 127 year history in the islands, Bank of Hawai‘i has developed an exceptionally seasoned deposit base, built one relationship at a time, over many years, and in neighborhoods and communities we understand unique marketplace diversified long tenured 5
Slide 6: Unique deposit market
unique deposit market other 3.23% Territorial Savings Bank 2.93% Bank of Hawaiʻi 33.81% the leader in a unique deposit Central Pacific Bank market with five 11.91% local competitors holding 97% of the First Hawaiian Bank bank deposit market American Savings 33.79% Bank 14.33% 2023 source: FDIC Annua
Slide 7: Long tenured deposit base
long tenured deposit base segment (1) avg tenure (yrs) 10-20 years Commercial Core 28.9 21% The Private Bank 18.3 >20 years 53% Small Business 17.0 Community 22.2 <10 years 26% total 23.5 note: as of March 31, 2024 7 (1): excludes public products and Bank of Hawai‘i accounts
Slide 8: Stable deposit balances
stable deposit balances $ in billions average balances $20.3 $20.4 $20.5 $20.7 $20.5 $20.0 $13.5 $14.0 $14.0 $14.7 $15.0 $15.0 $6.9 $6.4 $6.0 $5.8 $5.7 $5.6 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 noninterest-bearing deposits interest-bearing deposits note: numbers may not add up due to rounding 8
Slide 9: Cost of funds: interest-bearing deposits
cost of funds interest-bearing deposits 2.73% 2.44% 2.39% 2.30% 2.11% 1.95% 1.59% 1.54% 1.09% 0.97% 0.69% 0.48% 0.30% 0.20% 0.13% 0.11% 0.07% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 BOH KRX median source: S&P Capital IQ; KBW Regional Banking Index (KRX) as of 1/2/24 9
Slide 10: Cost of funds: total deposits
cost of funds total deposits 2.10% 1.85% 1.74% 1.67% 1.52% 1.40% 1.09% 1.08% 0.75% 0.66% 0.46% 0.31% 0.20% 0.12% 0.08% 0.07% 0.05% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 BOH KRX median source: S&P Capital IQ; KBW Regional Banking Index (KRX) as of 1/2/24 10
Slide 11: Deposit beta performance
deposit beta performance 38.0% 33.4% 32.3% 30.9% 28.7% 26.1% 23.1% 21.0% 15.4% 15.9% 11.5% 9.6% 7.1% 3.2% 3.5% 0.0% 0.0% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 BOH KRX median source: S&P Capital IQ; KBW Regional Banking Index (KRX) as of 1/2/24 11
Slide 12: Readily available liquidity
readily available liquidity Bank of Hawai‘i carries substantial liquidity lines and equivalents for both day-to-day operational and liquidity backstop purposes $10.3B cash securities available $8.6B FHLB uninsured/ uncollateralized FRB deposits note: as of March 31, 2024, cash includes fed funds sol
Slide 13: Unemployment: experience and forecast
unemployment experience & forecast 22.5% 3.1% 2.7% 2.6% 2.5% 2.2% May-22 Aug-22 May-23 Aug-23 May-20 Aug-20 May-21 Aug-21 Oct-22 Oct-23 2Q24 3Q24 4Q24 Oct-20 Oct-21 Apr-22 Apr-23 Apr-20 Apr-21 Jan-23 Jan-24 Jun-22 Feb-24 Mar-24 Jan-20 Jan-21 Jan-22 Jul-22 Feb-23 Mar-23 Jun-23 Jul-23 Feb-20 Mar-20 Ju
Slide 14: Visitor arrivals
visitor arrivals monthly by market, indexed to January 2017 200 180 160 140 120 100 80 60 40 20 - total domestic Japan other source: Hawaii Department of Business, Economic Development, and Tourism (DBEDT) 14
Slide 15: Revenue per available room
revenue per available room revenue per available room (RevPAR) $340 $310 $280 $250 $220 $190 $160 $130 $100 $70 $40 $10 source: Hawaii Department of Business, Economic Development, and Tourism (DBEDT) 15
Slide 16: Stable real estate prices
stable real estate prices Oahu market indicators – 1Q 2024 single family homes condominiums 1Q 2024 1Q 2023 Δ 1Q 2023 1Q 2024 1Q 2023 Δ 1Q 2023 4.4% 1.0% median sales $1,070 $1,025 $505 $500 price (000s) 6.1% closed sales 593 559 970 1044 -7.1% 7 days median days 29 36 32 25 on market 7 days source:
Slide 17: Credit performance
AN Bank of Hawaii Corporation | credit performance
Slide 18: Lending philosophy
lending philosophy we lend in our core markets to long-standing relationships Hawai'i 92% U.S. West mainland Pacific 3% 5% note: as of March 31, 2024 18
Slide 19: Steady organic loan growth
steady organic loan growth $ in billions average total loans and leases $13.9 $13.9 $12.9 $12.0 $11.6 $10.7 2019 2020 2021 2022 2023 1Q24 19
Slide 20: Consumer portfolio
consumer portfolio 58% of total loans wtd % total % total avg asset type consumer loans WALTV FICO home equity residential mortgage 57% 33% 52% 806 $2.2 home equity 28% 16% 48% 789 $8.1B automobile 10% 6% n/a 732 residential consumer other consumer 5% 3% n/a 758 mortgage $4.6 automobile total consum
Slide 21: Commercial portfolio
commercial portfolio 42% of total loans CRE $3.7 % total % total C&I asset type residential comml loans WALTV mortgage commercial real estate 64% 27% 55% commercial & industrial 29% 12% n/a $5.8B commercial construction 6% 2% 57% leasing 1% 0.4% n/a CRE total commercial home 100% 42% 56% constructio
Slide 22: Stable real estate market
stable real estate market Oahu market vacancies vacancy trend vacancy Oahu – 4Q23 Oahu – 4Q22 Oahu – 10 yr avg industrial lower 0.64% 0.81% 1.75% office stable 13.45% 12.90% 12.46% retail stable 6.02% 5.54% 5.91% multi-family stable 4.50% 4.30% 4.67% source: Colliers (industrial, office, retail); Co
Slide 23: CRE supply constraints
CRE supply constraints Oahu market inventory 10-yr CAGR: 0.3% 10-yr CAGR: -1.1% 16.0 office 14.0 12.0 square feet (millions) 10.0 8.0 6.0 4.0 2.0 0.0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 10-yr CAGR: 0.7% 10-yr CAGR: 0.7% multi-family 30.0 25.0 units (thousands) 20.0 15.0 10.0 5.0 0
Slide 24: Oahu lodging market
Oahu lodging market RevPar and occupancy up, inventory remains flat RevPar trend RevPar Oahu – 4Q23 Oahu – 4Q22 Oahu – 10 yr avg $224 $202 $179 occupancy trend occupancy Oahu – 4Q23 Oahu – 4Q22 Oahu – 10 yr avg 79.6% 75.4% 75.5% 10-yr CAGR: -0.03% source: Hawaii Tourism Authority 24
Slide 25: Commercial real estate (CRE)
commercial real estate (CRE) 27% of total loans 1,000 900 800 700 600 $millions 500 6.5% 400 5.2% 4.8% 300 4.1% 3.4% 200 2.7% 100 0 multi-family industrial retail lodging office other wtd avg LTV 58% 56% 55% 53% 57% 52% % owner n/a 41% 4% n/a 21% 29% avg exposure 3.0 2.5 4.2 12.8 1.8 3.3 ($millions)
Slide 26: CRE scheduled maturities
CRE scheduled maturities 5% maturing in 2024 scheduled maturities 2,500 2,000 52.4% 1,500 $millions 1,000 12.5% 500 9.7% 7.1% 8.4% 5.1% 4.8% 0 2024 2025 2026 2027 2028 2029 2030+ 26
Slide 27: CRE tail risk
CRE tail risk LTV > 80% - $37MM, 1.0% of CRE LTV > 60% to 70% 22% $3.7B LTV > 70% to 80% CRE 16% LTV ≤ 60% 61% 1% $37MM LTV > 80% 27
Slide 28: CRE office
CRE office 3% of total loans scheduled maturity 300 LTV distribution 250 200 42.3% $ millions LTV > 60% to 70% 150 35.6% 25% 100 11.0% 50 2.9% 5.2% LTV > 70% to 0.8% 2.3% 80% - $377MM 15% 2024 2025 2026 2027 2028 2029 2030+ LTV > 80% highlights 6% LTV ≤ 60% • 57% wtd avg LTV 54% • $1.8MM average exp
Slide 29: CRE multi-family
CRE multi-family 7% of total loans scheduled maturity 65.3% 600 LTV distribution 500 400 $ millions LTV > 60% to 70% 30% 300 200 8.7% 10.1% 100 6.6% 2.1% 3.0% 4.1% LTV > 70% to $901MM - 80% 2024 2025 2026 2027 2028 2029 2030+ 20% highlights LTV ≤ 60% 49% LTV > 80% • 58% wtd avg LTV 0.6% • $3.0MM ave
Slide 30: Credit quality
credit quality net charge-offs non-performing assets 0.4 0% 0.3 5% 0.3 0% 0.2 5% $0 0.2 0% $0 0.1 5% 0.08% 0.09% 0.08% 0.09% $0 0.07% 0.05% 0.1 0% $0 0.0 5% $0 0.0 0% $0 1Q23 4Q23 1Q24 1Q23 4Q23 1Q24 $0 NCOs/average loans NPAs/period-end loans plus OREO $0 $0 delinquencies criticized 3.0 0% 1.4 0% 2
Slide 31: Financial update
AN Bank of Hawaii Corporation | financial update
Slide 32: Hedging program
hedging program $3.0 billion total notional of pay-fixed/receive-float swaps as of 3/31/24 positions us well for a range of rate outcomes earning asset composition 0.4% 1% 1% 100% 5% 9% 13% 13% 90% 2% 26% 27% 3% 3% 80% 27% 28% 70% 29% 29% 60% 50% 40% 73% 72% 67% 30% 61% 55% 55% 20% 10% 0% 12/31/2022
Slide 33: NII and NIM
NII and NIM $ in millions $115.8 $113.9 positive • repricing from cashflows and other: +$4.7 negative • deposit mix shift and repricing: $(3.3) • earning assets from deposits: $(2.2) 2.13% 2.11% non-recurring • rate reset on fixed to float investment securities: $(0.7) • one less calendar day: $(0.3
Slide 34: Cashflows repricing
cashflows repricing $ in millions $350 maturities & prepayments $300 $281 $275 $250 $200 $150 $139 $111 $100 $50 $- 1Q24 fixed loans floating loans adjustable loans inv. portfolio matured/run-off yield & reinvestment opportunity 7.7% 8.0% 7.1% 7.1% 7.0% 7.0% 6.0% 5.4% 5.0% 4.1% 3.9% 3.6% 4.0% 3.2% 3
Slide 35: Average total earning assets yield
avg total earning assets yield in basis points earning assets continue to reprice higher 385 389 372 356 342 317 284 260 244 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 35
Slide 36: Noninterest income
noninterest income $ in millions steady core noninterest income reported noninterest income core noninterest income $42.3 $42.3 $41.3 $42.3 $42.3 $40.7 normalizing items: +$0.6 Visal Class B conversion ratio adjustment 1Q23 4Q23 1Q24 1Q23 4Q23 1Q24 note: numbers may not add up due to rounding 36
Slide 37: Noninterest expense
noninterest expense $ in millions continued discipline in expense management reported noninterest expense core noninterest expense $116.0 $111.9 $14.7 FDIC $105.9 $104.9 special $102.9 $103.2 assessment normalizing items: -$14.7 FDIC normalizing items: normalizing items: special assessment -$4.0 sea
Slide 38: Financial summary
financial summary $ in millions, except per share amounts 1Q 2024 4Q 2023 1Q 2023 ∆ 4Q 2023 ∆ 1Q 2023 net interest income $ 113.9 $ 115.8 $ 136.0 $ (1.8) $ (22.0) noninterest income 42.3 42.3 40.7 0.0 1.5 total revenue 156.2 158.1 176.7 (1.8) (20.5) noninterest expense 105.9 116.0 111.9 (10.1) (6.1)
Slide 39: Capital
capital continued organic capital growth 13.81% 13.60% 13.13% 13.6% 12.56% 12.74% 77.1% 1 12.10% 11.33% 11.50% 3.60% 3.81% 10.88% 3.13% 4.56% 4.74% 59.9% 60.1% 4.10% 4.83% 5.00% 4.38% 7.51% 7.62% 7.19% 2.51% 2.62% 2.19% 10.00% 10.00% 10.00% 8.00% 8.00% 8.00% 6.50% 6.50% 6.50% 5.00% 5.00% 5.00% 0.00%
Slide 40: Takeaways
takeaways ✔ high quality deposit base in unique and competitively advantageous deposit market ✔ flattening deposit cost and continuing cashflow repricing ✔ exceptional credit quality ✔ strong liquidity 40
Slide 41: Q&A
AN Bank of Hawaii Corporation | Q&A
Slide 42: Appendix
AN Bank of Hawaii Corporation | appendix
Slide 43: Insured/collateralized deposits
insured/collateralized deposits uninsured/ uncollateralized insured 42% 49% uninsured/ collateralized 9% note: as of March 31, 2024 43