Bank Of Hawaii Corporation · NYSE:BOH
Bank Of Hawaii — Q4 2023 Earnings Presentation
48 slides from Bank Of Hawaii's earnings presentation, Jan 22, 2024
Slide 1: Fourth quarter 2023 financial report
Bank of Hawai‘i Corporation fourth quarter 2023 financial report January 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 • period end total deposits increased 1.2% quality balance • average total deposits increased 1.0% sheet performance • growth attributed to increase in core customer deposits • total loans and leases increased by 0.3% • $10.2 billion in readily available liquidity exceeds $8.9 billion in
Slide 4: Highlights – balance sheet
highlights – balance sheet $ in millions deposit strength moderate loans and leases growth $21,055 $13,965 $13,919 $20,802 $20,616 $13,646 12/31/22 9/30/23 12/31/23 12/31/22 9/30/23 12/31/23 increased readily available liquidity organic capital growth $10.2B 12.53% 12.56% $9.6B 12.15% $7.7B 12/31/22
Slide 5: Our deposits
our deposits through our 125 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 28.0 22% The Private Bank 18.6 >20 years 53% Small Business 18.3 Community 22.3 <10 years 25% total 23.4 note: as of December 31, 2023 7 (1): excludes public products and Bank of Hawai‘i accounts
Slide 8: Stable deposit balances
stable deposit balances $ in billions spot balance increased by 1.2% from 9/30/23 average balance increased by 1.0% from 3Q23 $21.1 $20.7 $20.4 $20.5 $20.8 $20.3 $20.6 $20.5 $20.5 $20.0 12/31/22 3/31/23 6/30/23 9/30/23 12/31/23 4Q22 1Q23 2Q23 3Q23 4Q23 8
Slide 9: Stabilization in NIB
stabilization in NIB $ in billions $6.6 $6.3 $5.9 $5.8 $5.8 33% 31% 29% 28% 28% Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 monthly average noninterest-bearing demand (NIB) NIB as a percentage of monthly average total deposits 9
Slide 10: 2023 deposit balances change
2023 deposit balances change (1) (2) all commercial banks BOH 2.1% -1.9% (1) compares 12/27/23 vs. 12/28/22; all commercial bank data derived from H.8 Assets and Liabilities of Commercial Banks in the United States, Table 9 - Assets and Liabilities of All Commercial Banks in the United States, not s
Slide 11: Cost of funds interest-bearing deposits
cost of funds interest-bearing deposits 2.44% 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 BOH KRX median source: S&P Capital IQ; KBW Regional Banking Index (KRX) as of 1/3/23 11
Slide 12: Cost of funds total deposits
cost of funds total deposits 1.85% 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 BOH KRX median source: S&P Capital IQ; KBW Regional Banking Index (KRX) as of 1/3/23 12
Slide 13: Deposit beta performance
deposit beta performance 40.0% 35.0% 33.4% 31.4% 31.6% 29.6% 30.0% 28.7% 26.1% 25.0% 23.1% 21.0% 20.0% 15.4% 15.9% 15.0% 11.5% 9.6% 10.0% 7.1% 5.0% 3.2% 3.5% 0.0% 0.0% 0.0% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 Oct-23 Nov-23 Dec-23 BOH KRX median source: S&P Capital IQ; KBW Regional Banking Index (KRX)
Slide 14: 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 $10.2B cash $8.9B securities available FHLB uninsured/ uncollateralized deposits FRB note: as of December 31, 2023, FRB borrowing capacity i
Slide 15: Unemployment experience & forecast
unemployment experience & forecast 22.6% 2.9% 2.7% 2.5% 2.5% 2.4% 2.2% Apr-20 Jul-20 Nov-20 Jan-20 Apr-21 Jul-21 Nov-21 Jan-21 Apr-22 Jul-22 Nov-22 Jan-22 Apr-23 Jul-23 Nov-23 1Q24 2Q24 3Q24 4Q24 Sep-20 Dec-20 Jan-23 Aug-20 Oct-20 Sep-21 Dec-21 Sep-22 Dec-22 Feb-20 Mar-20 May-20 Jun-20 Aug-21 Oct-21
Slide 16: 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) 16
Slide 17: 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) 17
Slide 18: Stable real estate prices
stable real estate prices Oahu market indicators – December 2023 single family homes condominiums Dec 2023 Dec 2022 Dec 2019 Δ Dec 2022 Δ Dec 2019 Dec 2023 Dec 2022 Dec 2019 Δ Dec 2022 Δ Dec 2019 21.5% 1.5% 19.9% median sales price $997 $1,050 $820 $510 $503 $426 (000s) -5.1% 0.7 months 0.3 months 1
Slide 19: Credit performance
AN Bank of Hawaii Corporation | credit performance
Slide 20: 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 December 31, 2023 20
Slide 21: Dynamically managing credit risk
dynamically managing credit risk de-risking the balance sheet loan portfolio balance $16.0 Billions $14.0 $0.1 $0.1 $12.0 $0.2 $0.2 $0.3 $10.0 $0.4 $0.5 $8.0 $0.5 $0.6 $13.8 $0.6 $13.0 $6.0 $1.5 $0.6 $11.5 $12.0 $1.3 $0.8 $0.7 $10.5 $0.9 $9.8 $9.0 $4.0 $8.0 $7.0 $5.3 $5.9 $5.0 $4.8 $4.5 $4.6 $5.1 $2
Slide 22: Historical net charge-off rates
historical net charge-off rates lower net charge offs through different economic cycles annual net charge-off rate 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 3Q23 -0.50% BOH BOH core KRX all banks KRX – represents historical a
Slide 23: Loan portfolio
loan portfolio 79% of portfolio secured with real estate with combined weighted average loan to value of 54% C&I residential 12% mortgage 34% 41% commercial 59% consumer • 70% real estate secured • 85% real estate secured • wtd avg LTV 55% • wtd avg LTV 54% • 59% w/ BOH ≥ 10 yrs • 60% w/ BOH ≥ 10 yr
Slide 24: Commercial real estate (CRE)
commercial real estate (CRE) 27% of total loans asset type % total CRE wtd avg LTV retail multi-family 24% 58% 18% lodging 15% industrial 20% 56% retail 18% 55% office 10% industrial $3.8B lodging 15% 52% 20% CRE office 10% 55% specialty 11% specialty 11% 53% other other 2% 48% 2% multi-family 24% t
Slide 25: CRE office
CRE office 3% of total loans scheduled maturity LTV distribution 300 250 200 LTV > 60% to 42.2% $ millions 70% 150 35.7% 25% 100 11.0% 50 2.7% 5.2% 0.8% 2.4% $0.38B LTV > 70% to - 2024 2025 2026 2027 2028 2029 2030+ 80% 16% LTV ≤ 60% highlights 59% • 55% wtd avg LTV LTV > 80% • $1.8MM average exposu
Slide 26: Oahu investor office market
Oahu investor office market 13.5 million square feet rents remain stable as conversions to alternative purpose continue to drive decline in inventory source: Colliers 26
Slide 27: Honolulu multi-family market
Honolulu multi-family market 30,307 units severely limited existing and new supply, compounded by the high cost of homeownership, continues to drive rental demand source: CoStar 27
Slide 28: Oahu industrial market
Oahu industrial market 41.5 million square feet vacancy rates at a historic low, while available industrial space listings remain near record low source: Colliers 28
Slide 29: Oahu retail market
Oahu retail market 17.1 million square feet record retail sales and tourism spend continue to support post-pandemic recovery source: Colliers 29
Slide 30: Oahu lodging market
Oahu lodging market 30.9 thousand rooms outlook is generally positive, as inventory remains flat and occupancy & RevPar report comparably with pre-pandemic tourism source: Hawaii Tourism Authority, UHERO 30
Slide 31: CRE scheduled maturities
CRE scheduled maturities 8% maturing in 2024 scheduled maturities 2,500 2,000 51.4% 1,500 $millions 1,000 12.3% 500 7.9% 8.7% 7.9% 7.2% 4.7% 0 2024 2025 2026 2027 2028 2029 2030+ 31
Slide 32: CRE tail risk
CRE tail risk LTV > 80% - 0.4% of CRE, 0.1% of total loans LTV > 60% to 70% 21% $0.01B of CRE with LTV > 70% to 80% 17% LTV > 80% LTV ≤ 60% 62% LTV > 80% 0.4% 32
Slide 33: Construction
construction 2% of total loans housing - other % total wtd avg 5% asset type construction LTV retail housing – low income / 60% 56% 18% affordable housing – other 5% 42% industrial retail 18% 64% $0.3B 8% industrial 8% 68% construction lodging lodging 8% 56% 8% housing - affordable office 1% 58% 60%
Slide 34: 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% 0.09% 0.08% 0.08% 0.05% 0.06% 0.06% $0 0.05% 0.1 0% $0 0.04% 0.0 5% $0 0.0 0% $0 4Q22 3Q23 4Q23 2022 2023 4Q22 3Q23 4Q23 $0 NCOs/average loans NPAs/period-end loans plus OREO $0 $0 delinquencies crit
Slide 35: Financial update
AN Bank of Hawaii Corporation | financial update
Slide 36: Hedging program
hedging program increased pay-fixed/receive-float swaps by $1.0 billion ($3.0 billion total notional) in 4Q23 to hedge a portion of fixed-rate asset exposure asset composition 12/31/22 3/31/23 6/30/23 9/30/23 12/31/23 fed funds sold fed funds sold fed funds sold fed funds sold fed funds sold swap sw
Slide 37: NII and NIM
NII and NIM $ in millions $120.9 $115.8 • decrease in earning assets • deposit rates and betas remain well below peers 2.13% 2.13% • stable NIM 3Q23 4Q23 NII NIM 37
Slide 38: Asset repricing
asset repricing $ in billions projected repricing, maturities & prepayments $10.1 $10.2 $5.0 yr 1 yr 2 $4.5 $4.5 $4.5 $4.0 $3.5 $3.0 $2.7 $2.7 $2.3 $2.3 $2.5 $2.0 $1.0 $1.0 $1.5 $1.0 $0.7 $0.7 $0.5 $1.4 $1.3 $0.0 loans repricing/swaps inv. portfolio repricing/swaps & fed funds sold fixed loans float
Slide 39: Avg total earning assets yield
avg total earning assets yield in basis points 385 372 356 342 317 284 260 244 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 39
Slide 40: Noninterest income
noninterest income $ in millions moderate growth in core noninterest income reported noninterest income core noninterest income $50.3 $41.2 $42.3 $41.2 $42.3 $41.0 normalizing items: +$0.8 Visa Class B conversion ratio adjustment +$4.6 net loss on securities sales -$14.7 gain on early termination of
Slide 41: Noninterest expense
noninterest expense $ in millions disciplined expense management in challenging operating environment reported noninterest expense core noninterest expense $116.0 $102.7 $105.6 $14.7 FDIC special $102.7 $103.1 $102.9 assessment normalizing items: normalizing items: -$14.7 FDIC special -$2.1 separati
Slide 42: Financial summary
financial summary $ in millions, except per share amounts 4Q 2023 3Q 2023 4Q 2022 ∆ 3Q 2023 ∆ 4Q 2022 2023 ∆ 2022 net interest income $ 115.8 $ 120.9 $ 140.7 $ (5.2) $ (25.0) $ 497.0 $ (43.5) noninterest income 42.3 50.3 41.2 (8.1) 1.1 176.6 19.1 total revenue 158.1 171.3 181.9 (13.2) (23.8) 673.6 (
Slide 43: Capital
capital strong risk-based capital 13.56% 13.60% 13.13% 13.24% 13.6% 78.2% 1 12.53% 12.56% 12.10% 12.21% 11.29% 11.33% 3.56% 3.60% 10.88% 11.00% 3.13% 3.24% 4.53% 4.56% 60.4% 59.9% 4.10% 4.21% 4.79% 4.83% 4.38% 4.50% 7.51% 7.19% 7.21% 7.22% 2.19% 2.21% 2.22% 2.51% 10.00% 10.00% 10.00% 10.00% 8.00% 8.
Slide 44: Takeaways
takeaways ✔ unique and competitively advantageous deposit market ✔ high quality deposit base and market leading cost of deposits ✔ stable and improving net interest margin ✔ high quality assets ✔ exceptional credit quality ✔ strong risk-based capital 44
Slide 45: Q&A
AN Bank of Hawaii Corporation | Q&A
Slide 46: Appendix
AN Bank of Hawaii Corporation | appendix
Slide 47: Insured/collateralized deposits
insured/collateralized deposits uninsured/ insured uncollateralized 48% 42% uninsured/ collateralized 10% note: as of December 31, 2023 47
Slide 48: Maui portfolio
Maui portfolio 11% of total loans, 1% of total loans located in fire impacted zone fire impacted zone exposure down 8.5% from prior quarter with no change in estimated potential loss of $11 million $1.6B total Maui fire impacted zone 9.8% $144.0 million $10.9 million secured* unsecured * principally