Bank Of Hawaii Corporation · NYSE:BOH
Bank Of Hawaii — Q2 2023 Earnings Presentation
40 slides from Bank Of Hawaii's earnings presentation, Jul 24, 2023
Slide 1: Second quarter 2023 financial report
Bank of Hawai‘i Corporation second quarter 2023 financial report July 24, 2023
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 • total deposits increased 0.1% quality balance • growth attributed to increase in core customer deposits sheet performance • loans and leases increased 0.7% • $1.7 billion in cash & cash equivalents strong liquidity • $8.5 billion in readily available liquidity • readily available liquid
Slide 4: 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 ✔ tenured 4
Slide 5: Unique deposit market
unique deposit market other 3.0% Territorial Savings Bank 3.0% Bank of Hawaiʻi 33.4% unique deposit market with five Central Pacific Bank local competitors 11.2% holding 97% of the bank deposit First Hawaiian Bank American Savings 35.4% market Bank 14.0% 2022 source: FDIC Annual Summary of Deposits
Slide 6: Q1 2023 change in deposit balances
q1 2023 change in deposit balances (1) (2) small banks five largest hawai‘i banks -0.9% -4.4% (1) compares 3/29/23 vs. 12/28/22; small banks data derived from H.8 Assets and Liabilities of Commercial Banks in the United States, Table 9 - Assets and Liabilities of Small Domestically Charted Commercia
Slide 7: Majority of deposits insured or collateralized
majority of deposits insured or collateralized uninsured 39% insured 49% collateralized 12% note: as of June 30, 2023 7
Slide 8: Diversified deposit base
diversified deposit base other agency 1.9% 8.8% state public and 25.1% other 12.0% county 64.2% commercial 39.1% governmental consumer high net 48.9% worth mass 26.6% market 38.5% mass affluent overall 34.9% note: as of June 30, 2023 consumer 8
Slide 9: Tenured deposit base
tenured deposit base 10-20 years 24% >20 years 52% <10 years 25% note: as of June 30, 2023, numbers may not add up due to rounding 9
Slide 10: Deposit balances
deposit balances $ in billions $25.0 $20.6 $20.5 $20.5 $20.0 • spot balance increased by 0.1% $15.0 • average balance decreased by 2.0% $10.0 $5.0 $0.0 12/31/22 3/31/23 6/30/23 10
Slide 11: Cost of funds: interest-bearing deposits
cost of funds interest-bearing deposits 1.97% 1.54% 1.32% 1.22% 1.09% 0.69% 0.70% 0.63% 0.29% 0.30% 0.28% 0.22% 0.09% 0.11% 0.11% 0.07% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 BOH KRX bottom quartile KRX top quartile source: S&P Capital IQ; KBW Regional Banking Index (KRX) as of 1/3/23, top quartile represent
Slide 12: Cost of funds: total deposit costs
cost of funds total deposit costs 1.44% 1.08% 0.89% 0.79% 0.75% 0.46% 0.46% 0.43% 0.19% 0.20% 0.18% 0.15% 0.05% 0.05% 0.07% 0.07% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 BOH KRX bottom quartile KRX top quartile source: S&P Capital IQ; KBW Regional Banking Index (KRX) as of 1/3/23, top quartile represents 25th
Slide 13: Deposit beta performance
deposit beta performance 29.1% 21.7% 21.0% 15.9% 16.0% 14.2% 11.5% 10.7% 7.9% 7.1% 4.2% 3.2% 1.4% 0.0% 0.0% 0.0% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 BOH KRX bottom quartile KRX top quartile source: S&P Capital IQ; KBW Regional Banking Index (KRX) as of 1/3/23, beta calculated as change in average total de
Slide 14: Readily available liquidity
readily available liquidity Bank of Hawai‘i carries substantial liquidity lines and equivalents for both day-to-day operational purposes as well as for liquidity backstop purposes $8.5B $8.1B cash securities available FHLB uninsured deposits FRB note: as of June 30, 2023, FRB borrowing capacity incl
Slide 15: Credit performance
4h Bank of Hawai'i Corporation | credit performance
Slide 16: Lending philosophy
lending philosophy we lend in markets we know & to long-standing relationships we understand Hawai'i 92% U.S. West mainland Pacific 3% 5% note: as of June 30, 2023 16
Slide 17: De-risking the balance sheet
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 $13.7 $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 $2.0 $0.0 2008 2009 2010 2011 2012
Slide 18: 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 1Q23 -0.50% BOH BOH core KRX all banks KRX – represents historical a
Slide 19: Loan portfolio
loan portfolio 79% of portfolio secured with real estate with combined weighted average loan to value of 55% C&I residential 11% mortgage 34% 40% commercial 60% consumer • 72% real estate secured • 84% real estate secured • wtd avg LTV 56% • wtd avg LTV 54% • 56% w/ BOH ≥ 10 yrs • 57% w/ BOH ≥ 10 yr
Slide 20: Commercial real estate (CRE)
commercial real estate (CRE) 27% of total loans asset type % total loans wtd avg LTV other commercial multi-family 6.5% 59% 13% industrial 5.5% 56% retail 5.2% 55% $13.9B non-office CRE lodging 4.1% 53% total loans 24% office 2.7% 56% specialty 2.9% 53% other 0.6% 48% office 3% total CRE 27.3% 56% 2
Slide 21: CRE scheduled maturities
CRE scheduled maturities 10% maturing prior to 2025 scheduled maturity 2,500 55% 2,000 1,500 $ millions 1,000 12% 500 7% 8% 7% 9% 3% 0 2023 2024 2025 2026 2027 2028 2029+ 21
Slide 22: CRE office
CRE office 3% of total loans scheduled maturity 300 LTV distribution 250 200 $ millions 43% LTV > 60% to 150 35% 70% 23% 100 11% 50 3% 6% 2% 1% 0 56% 2023 2024 2025 2026 2027 2028 2029+ wtd LTV LTV > 70% to 80% 15% highlights LTV ≤ 60% 62% • 56% wtd avg LTV LTV > 80% • $1.7MM average exposure 0.3% •
Slide 23: CRE tail risk
CRE tail risk LTV > 80% - 0.8% of CRE, 0.2% of total loans LTV > 60% to 70% 23% $3.8B LTV > 70% to CRE 80% 17% LTV ≤ 60% 59% LTV > 80% 0.8% 23
Slide 24: Construction
construction 2% of total loans % total wtd avg asset type loans LTV housing – low income / 0.8% 63% affordable other commercial 38% housing – other 0.1% 46% retail 0.4% 64% $13.9B industrial 0.2% 67% total loans lodging 0.2% 49% office 0.1% 71% housing construction 1% specialty 0.01% 56% non-housing
Slide 25: Credit quality
credit quality 0.4 0% net charge-offs 0.3 5% non-performing assets 0.3 0% 0.2 5% $0 0.2 0% $0 0.1 5% 0.12% 0.08% 0.09% 0.08% 0.06% $0 0.1 0% $0 0.02% 0.04% 0.03% 0.0 5% $0 0.0 0% $0 2Q22 1Q23 2Q23 YTD22 YTD23 2Q22 1Q23 2Q23 $0 NCOs/average loans NPAs/period-end loans plus OREO $0 0.4 0% delinquencie
Slide 26: Financial update
4h Bank of Hawai'i Corporation | financial update
Slide 27: NII and NIM
NII and NIM $ in millions $136.0 $124.3 • NII and NIM challenges from inverted yield curve and higher short term rates • deposit rates and betas remain well below peers 2.47% 2.22% • $1.7 billion in cash & cash equivalents reduced NIM by approximately 4 bps 1Q23 2Q23 = NIM 27
Slide 28: Asset repricing
asset repricing projected repricing, maturities & prepayments ($ in billions) $7.7B $7.9B $3.5 $3.0 $3.0 $3.0 $2.5 $2.1 $2.1 $2.1 $2.0 $1.8 $1.5 $1.0 $0.7 $0.7 $0.5 $0.0 yr 1 yr 2 loans repricing inv. portfolio repricing & fed funds loans maturing/prepayments inv. portfolio maturing/prepayments matu
Slide 29: Noninterest income
noninterest income $ in millions stable core noninterest income from diverse sources reported noninterest income core noninterest income $42.2 $43.3 $42.2 $40.7 $41.3 $41.7 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 note: 1Q23 reported noninterest income included a negative $0.6 million adjustment related to a c
Slide 30: Noninterest expense
noninterest expense $ in millions disciplined expense management in challenging operating environment reported noninterest expense core noninterest expense $111.9 $102.9 $104.0 $102.9 $104.9 $104.0 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 note: 1Q23 reported noninterest expense included seasonal payroll expens
Slide 31: Financial summary
financial summary $ in millions, except per share amounts 2Q 2023 1Q 2023 2Q 2022 ∆ 1Q 2023 ∆ 2Q 2022 net interest income $ 124.3 $ 136.0 $ 132.9 $ (11.6) $ (8.6) noninterest income 43.3 40.7 42.2 2.5 1.1 total revenue 167.6 176.7 175.1 (9.1) (7.5) noninterest expense 104.0 111.9 102.9 (7.9) 1.1 ope
Slide 32: Capital
capital 14.0% 13.13% 13.24% 12.10% 12.21% 12.0% 13.6% 10.88% 11.00% 3.13% 3.24% 10.0% 4.10% 4.21% 4.38% 4.50% 8.0% 7.19% 7.21% 6.0% 2.19% 2.21% 10.00% 10.00% 4.0% 8.00% 8.00% 6.50% 6.50% 5.00% 5.00% 2.0% 0.0% 1Q23 2Q23 1Q23 2Q23 1Q23 2Q23 1Q23 2Q23 CET1 tier 1 capital total capital tier 1 leverage w
Slide 33: Takeaways
takeaways ✔ unique and competitively advantageous deposit market ✔ high quality deposit base ✔ market leading cost of deposits ✔ high quality assets ✔ exceptional credit quality ✔ strong risk-based capital 33
Slide 34: Q&A
4 Bank of Hawai'i Corporation | Q&A
Slide 35: Appendix
4h Bank of Hawai'i Corporation | appendix
Slide 36: Loan to deposit ratio
loan to deposit ratio 95% 93% 91% 89% 85% 74% 72% 68% 65% 67% 68% 62% 66% 64% 62% 61% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 BOH KRX bottom quartile KRX top quartile source: S&P Capital IQ; KBW Regional Banking Index (KRX) as of 1/3/23, top quartile represents 25th percentile and bottom quartile represents 7
Slide 37: Unemployment experience & forecast
unemployment experience & forecast 22.6% 4.0% 4.2% 3.0% 2.2% Jul-20 Nov-20 Jul-21 Nov-21 Jul-22 Nov-22 Jan-20 Apr-20 Sep-20 Apr-21 Oct-20 Jan-21 Sep-21 Oct-21 Jan-22 Apr-22 Sep-22 Oct-22 Jan-23 Apr-23 3Q23 4Q23 Dec-20 Dec-21 Dec-22 Feb-20 Mar-20 May-20 Jun-20 Feb-21 Mar-21 Aug-21 Feb-22 Mar-22 Jun-2
Slide 38: 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) 38
Slide 39: 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) 39
Slide 40: Stable real estate prices
stable real estate prices Oahu market indicators – June 2023 single family homes condominiums June 2023 June 2022 June 2019 Δ June 2022 Δ June 2019 June 2023 June 2022 June 2019 Δ June 2022 Δ June 2019 31.3% 17.9% median sales price $1,050 $1,100 $800 $510 $534 $433 (000s) -4.5% -4.5% 1.1 months 1.2