Bank Of Hawaii Corporation · NYSE:BOH
Bank Of Hawaii — Q3 2024 Earnings Presentation
43 slides from Bank Of Hawaii's earnings presentation, Oct 28, 2024
Slide 1: Third quarter 2024 financial report
Bank of Hawai‘i Corporation third quarter 2024 financial report October 28, 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 • $0.93 diluted earnings per common share • $40.4 million net income earnings highlights • net interest margin expanded to 2.18% • 1.87% average cost of total deposits • 11.50% return on average common equity • 0.11% net charge-off rate • 0.14% non-performing assets level strong credit •
Slide 4: Highlights – balance sheet
highlights – balance sheet $ in billions stable average total deposits stable average total loans and leases $13.9 $13.8 $13.8 $20.5 $20.4 $20.5 3Q23 2Q24 3Q24 3Q23 2Q24 3Q24 tier 1 capital ratio total capital ratio 15.02% 15.11% 13.96% 14.05% 13.56% 12.53% 9/30/23 6/30/24 9/30/24 9/30/23 6/30/24 9/
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: Leader in a unique deposit market
leader in a unique deposit market TBNK BOH 2.9% 34.1% CPF 11.7% ASB 14.4% FHB the leader in a 32.5% unique deposit market with five 2024 local competitors holding 96% of the bank deposit market TBNK BOH BOH TBNK 2.9% 33.5% 32.2% 3.8% CPF CPF 11.8% 11.1% ASB ASB 14.2% 14.1% FHB FHB 33.5% 34.3% 2023 2
Slide 7: Stable deposit balances
stable deposit balances $ in billions average balances $20.3 $20.4 $20.5 $20.7 $20.5 $20.4 $20.5 $20.0 $13.5 $14.0 $14.7 $15.0 $14.0 $15.0 $15.0 $15.2 $6.9 $6.4 $6.0 $5.8 $5.7 $5.6 $5.4 $5.3 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 noninterest-bearing deposits interest-bearing deposits note: numbers
Slide 8: Cost of funds: interest-bearing deposits
cost of funds interest-bearing deposits 2.99% 2.91% 2.73% 2.52% 2.44% 2.46% 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 2Q24 3Q24 BOH KRX median source: S&P Capital IQ; KBW Regional Banking Index (KRX) 8
Slide 9: Cost of funds: total deposits
cost of funds total deposits 2.26% 2.19% 2.10% 1.85% 1.87% 1.81% 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 2Q24 3Q24 BOH KRX median source: S&P Capital IQ; KBW Regional Banking Index (KRX) 9
Slide 10: Unemployment
2.2% Jan-20 Feb-20 Mar-20 Apr-20 22.5% May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 experience & forecast Apr-21 May-21 Hawai‘i unemployment Jun-21 Jul-21 Aug-21 unemployment Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 source for national unemployment: Bureau of
Slide 11: 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) 11
Slide 12: 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) 12
Slide 13: Stable real estate prices
stable real estate prices Oahu market indicators – YTD 2024 as of September single family homes condominiums YTD-24 YTD-23 Δ YTD-23 YTD-24 YTD-23 Δ YTD-23 4.8% 1.0% median sales $1,100 $1,050 $510 $505 price (000s) 5.8% closed sales 2,101 1,985 3,390 3,592 -5.6% 9 days median days 18 22 29 20 on mar
Slide 14: Credit performance
AN Bank of Hawai'i Corporation | credit performance
Slide 15: Lending philosophy
lending philosophy we lend in our core markets to long-standing relationships Hawai'i 93% U.S. West mainland Pacific 3% 4% note: as of September 30, 2024 15
Slide 16: Steady organic loan growth
steady organic loan growth $ in billions average total loans and leases $13.9 $13.9 $13.8 $13.8 $12.9 $12.0 $11.6 $10.7 2019 2020 2021 2022 2023 1Q24 2Q24 3Q24 16
Slide 17: Consumer portfolio
consumer portfolio 57% of total loans wtd % total % total avg home equity asset type consumer loans WALTV FICO $2.2 residential mortgage 58% 33% 49% 805 home equity 27% 16% 46% 790 residential $8.0B mortgage consumer real estate secured 85% 49% 48% 800 $4.6 automobile 10% 6% n/a 733 automobile $0.8
Slide 18: Commercial portfolio
commercial portfolio 43% of total loans CRE $3.9 % total % total asset type comml loans WALTV residential commercial real estate 65% 28% 56% mortgage $5.9B construction 5% 2% 56% commercial real estate secured 71% 30% 56% commercial & industrial 28% 12% n/a construction leasing 1% 0.4% n/a $0.3 C&I
Slide 19: Stable real estate market
stable real estate market Oahu market vacancies and inventory vacancy inventory (sq ft) 2Q24 2Q23 10 yr avg 10 yr CAGR industrial 1.05% 0.76% 1.75% 0.28% office 13.57% 12.71% 12.46% - 1.08% retail 6.09% 5.92% 5.91% 0.74% multi-family 4.10% 4.40% 4.67% 0.70% note: 10-year average vacancy and 10-yr CA
Slide 20: Commercial real estate (CRE)
commercial real estate (CRE) 28% of total loans 1,000 $923.1 900 800 $731.1 700 $670.3 $654.5 600 $521.9 $millions 500 7% 400 $372.1 5% 5% 5% 300 4% 200 3% 100 0 multi-family industrial retail lodging office other wtd avg LTV 58% 56% 54% 53% 57% 54% % owner n/a 42% 4% n/a 20% 26% avg exposure $3.1 $
Slide 21: CRE scheduled maturities
CRE scheduled maturities modest near-term maturities 2,500 51.2% 2,000 1,500 $millions 1,000 14.0% 12.4% 500 7.1% 8.2% 4.5% 2.7% 0 2024 2025 2026 2027 2028 2029 2030+ 21
Slide 22: CRE loan balances by LTV
CRE loan balances by LTV LTV > 80% - $84MM, 2.2% of CRE 2,500 60.9% 2,000 1,500 $millions 1,000 22.9% 14.0% 500 1.9% 0.2% 0.01% 0 ≤ 60% > 60% to 70% > 70% to 80% > 80% to 85% > 85% to 90% > 90% 22
Slide 23: 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% 0.14% 0.10% 0.11% 0.11% $0 0.09% 0.1 5% $0 0.06% 0.1 0% 0.08% $0 0.0 5% $0 0.0 0% $0 3Q23 2Q24 3Q24 YTD24 3Q23 2Q24 3Q24 $0 NCOs/average loans NPAs/period-end loans plus OREO $0 $0 delinquencies criticized 2.4
Slide 24: Financial update
AN Bank of Hawai'i Corporation | financial update
Slide 25: NII and NIM trends
NII and NIM trends $ in millions increasing NII and NIM $142 $141 $136 5.43% 5.50% 5.50% 5.50% 5.43% $133 5.16% 4.69% $125 3.82% $124 $121 $118 2.35% $116 $115 $114 2.47% 2.60% 2.60% 2.47% 2.34% 2.22% 2.13% 2.13% 2.11% 2.15% 2.18% 0.94% 0.29% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 NI
Slide 26: NII breakdown
NII breakdown $ in millions $120 $118 $117.6 $(2.6) $4.2 $1.2 $116 $114.8 $114 $112 $110 2Q24 repricing from deposit mix shift and increase in earning 3Q24 cashflows and other repricing assets 26
Slide 27: Cashflow repricing
cashflow repricing $ in millions quarterly impact from cashflows repricing: +$3.6 million maturities/prepayments maturities/prepayments reinvestment opportunities $600 8.0% 7.1% $513 7.0% $500 6.1% 6.3% 6.0% 5.3% $400 5.0% 4.2% 4.1% $300 4.0% 3.5% $257 3.3% 2.9% 2.8% 3.0% $200 $159 2.0% 2.1% 2.0% $9
Slide 28: Deposit mix shift and repricing
deposit mix shift and repricing $ in millions quarterly NII impact from deposit mix shift and repricing in 3Q24: $(2.6) million QoQ change in average NIBD and low yield interest-bearing deposit balances 1Q23 vs 4Q22 2Q23 vs 1Q23 3Q23 vs 2Q23 4Q23 vs 3Q23 1Q24 vs 4Q23 2Q24 vs 1Q24 3Q24 vs 2Q24 $- $(2
Slide 29: Rate sensitive earning assets and interest-bearing deposits
rate sensitive earning assets and interest-bearing deposits net NII impact per quarter for 50 bps FF decrease from rate sensitive earning assets: $(9.6) million rate sensitive earning assets balances NII impact $7.6B $- $4.0 $3.1 $(1.0) $(0.8) $3.0 $2.8 $(1.3) $ in millions $(2.0) $ in billions $2.0
Slide 30: Time deposit maturity schedule
time deposit maturity schedule 39% of time deposits set to reprice in 3 months and 70% in 6 months 45% 4.44% 40% 4.24% % of total time deposits scheduled to mature 3.92% 3.76% 35% 30% 25% 20% 39% 15% 31% 10% 5% 10% 8% 0% 4Q24 1Q25 2Q25 3Q25 balance as % of total time deposits wtd avg rate note: as o
Slide 31: Optimizing balance sheet
optimizing balance sheet earning asset composition 120% 0.4% 1% 5% 100% 2% 3% 3% 3% 4% 1% 9% 13% 13% 14% 12% 26% 27% 80% 27% 28% 29% 29% 29% 30% 60% 40% 73% 72% 67% 61% 55% 55% 54% 53% 20% 0% 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 9/30/2024 fixed float/adjustable swa
Slide 32: Noninterest income
noninterest income $ in millions increasing core noninterest income reported noninterest income core noninterest income $50.3 $45.1 $45.1 $42.1 $41.0 $42.1 normalizing items: +$0.8 Visa Class B conversion ratio adjustment +$4.6 net loss on securities sales -$14.7 gain on early termination of private
Slide 33: Noninterest expense
noninterest expense $ in millions continued discipline in expense management reported noninterest expense core noninterest expense $109.2 $107.1 $105.6 $105.3 $107.1 $103.1 normalizing items: -$2.6 FDIC special normalizing items: assessment -$2.1 separation -$0.8 separation -$0.4 extraordinary -$0.6
Slide 34: Financial summary
financial summary $ in millions, except per share amounts 3Q 2024 2Q 2024 3Q 2023 ∆ 2Q 2024 ∆ 3Q 2023 net interest income $ 117.6 $ 114.8 $ 120.9 $ 2.8 $ (3.3) noninterest income 45.1 42.1 50.3 3.0 (5.2) total revenue 162.7 156.9 171.3 5.8 (8.5) noninterest expense 107.1 109.2 105.6 (2.1) 1.5 operat
Slide 35: Capital
capital strong capital 15.02% 15.11% 13.96% 14.05% 13.56% 13.6 $(442) 1 77.8% 1 12.53% 5.02% 5.11% 11.56% 11.66% 11.29% 3.56% $(374) 5.96% 6.05% $(335) 60.3% 4.53% 59.1% 5.06% 5.16% 4.79% 8.37% 8.38% 7.22% 3.37% 3.38% 2.22% 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
Slide 36: Takeaways
takeaways ✔ high quality and low cost deposit base in unique and competitively advantageous deposit market ✔ continuing trend of increase in NII and NIM ✔ exceptional credit quality ✔ strong liquidity and risk-based capital 36
Slide 37: Q&A
AN Bank of Hawai'i Corporation | Q&A
Slide 38: Appendix
AN Bank of Hawai'i Corporation | appendix
Slide 39: Insured/collateralized deposits
insured/collateralized deposits uninsured/ insured uncollateralized 48% 42% uninsured/ collateralized 10% note: as of September 30, 2024, numbers may not add up due to rounding 39
Slide 40: 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 $10.6B cash securities available $8.8B FHLB uninsured/ uncollateralized deposits FRB 40 note: as of September 30, 2024, cash includes fed fu
Slide 41: CRE supply constraints
CRE supply constraints Oahu market inventory 10-yr CAGR: 0.3% 10-yr CAGR: -1.1% 10-yr CAGR: 0.7% 10-yr CAGR: 0.7% note: 10-yr CAGR for inventory are based on year-end 2013 through 2023 41 source: Colliers (industrial, office, retail) and CoStar (multi-family)
Slide 42: CRE office
CRE office 3% of total loans scheduled maturity 300 LTV distribution 250 200 $ millions LTV > 60% to 42.3% 70% 150 36.3% 32% 100 11.0% 50 2.8% 5.0% 0.3% 2.3% LTV > 70% to - $372MM 80% 11% 2024 2025 2026 2027 2028 2029 2030+ LTV > 80% highlights 6% LTV ≤ 60% • 57% wtd avg LTV 51% • $1.8MM average exp
Slide 43: CRE multi-family
CRE multi-family 7% of total loans scheduled maturity 700 LTV distribution 66.5% 600 500 $ millions LTV > 60% to 70% 400 31% 300 200 15.8% 100 6.9% 2.0% 2.1% 2.9% 3.7% LTV > 70% to $923MM - 80% 2024 2025 2026 2027 2028 2029 2030+ 21% highlights LTV ≤ 60% 48% • 58% wtd avg LTV • $3.1MM average exposu