Bank Of Hawaii Corporation · NYSE:BOH
Bank Of Hawaii — Q2 2020 Earnings Presentation
50 slides from Bank Of Hawaii's earnings presentation, Jul 27, 2020
Slide 1: Bank of Hawaii Corporation Second Quarter 2020 Financial Results
Bank of Hawaii Corporation Second Quarter 2020 Financial Results July 27, 2020
Slide 2: 2020 Unemployment Experience & Forecast
2020 Unemployment Experience & Forecast Hawaii Unemployment Rate 25.9% 23.8% 23.5% 18.8% 13.9% 2.7% 2.7% 2.4% Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 3Q-20 4Q-20 Actual Actual Actual Actual Actual Actual Forecast Forecast Source: UHERO Base Case as of 5/28/20 2
Slide 3: Economic Forecast: Hawaii Unemployment Rate
Economic Forecast Hawaii Unemployment Rate 18.2 13.7 9.3 5.8 5.7 4.1 2.7 2.8 2.8 2.7 2019 2020F 2021F 2022F 2023F 3/30 Forecast 5/28 Base Forecast Source: UHERO Forecast Updates 3
Slide 4: Economic Forecast: Real GDP and Personal Income
Economic Forecast Real GDP Personal Income 3/30 Forecast 5/28 Base Forecast 3/30 Forecast 5/28 Base Forecast 99.2 87.6 97.3 98.0 96.7 95.9 94.7 84.5 91.8 83.0 89.9 81.3 81.0 80.6 86.5 79.2 77.0 77.4 $ in$ Billions $ in$ Billions 2019 2020F 2021F 2022F 2023F 2019 2020F 2021F 2022F 2023F 7.6 6.1 4.4 4
Slide 5: Well Positioned
Well Positioned • Strong Credit Metrics • Continued Stable Loan Growth • Strong Core Deposit Growth • Well Managed Funding Costs • Strong Liquidity • Solid Capital Levels 5
Slide 6: Credit Overview
Credit Overview
Slide 7: Loan Portfolio Excluding PPP
Loan Portfolio Excluding PPP 76% of Portfolio Secured with Quality Real Estate with Combined Weighted Average Loan to Value of 56% C&I Residential 13% Mortgage 35% 40% Commercial 60% Consumer 59% Real Estate Secured 83% Real Estate Secured Wtd Avg LTV 55% Wtd Avg LTV 56% 66% w/ BOH ≥ 10 yrs CRE 57%
Slide 8: Credit Quality
Credit Quality 1.00% Net Charge-offs ($ thousands) $30.0 Nonperforming Assets ($ millions) $6, 000 2.50% 0.80% $5,111 $25.0 $21.8 $22.7 $5, 000 2.00% $20.6 $20.0 0.60% $4, 000 $3,740 1.50% $15.0 $3, 000 $2,351 0.40% 1.00% $10.0 $2, 000 0.20% 0.18% 0.19% 0.20% 0.50% $5.0 $1, 000 0.09% 0.14% 0.18% $0.
Slide 9: Second Quarter 2020 Reserve Build
Second Quarter 2020 Reserve Build $ in millions CECL adoption Portfolio 12/31/2019 impact 1Q20 Build 3/31/2020 2Q20 Build 6/30/2020 Consumer 36.2 17.1 16.9 70.2 30.7 100.9 Commercial 73.8 (18.8) 13.0 68.0 4.5 72.5 Total 110.0 (1.7) 29.9 138.2 35.2 173.4 Coverage 1.00% -0.01% 0.23% 1.22% 0.25% 1.47%
Slide 10: Customer Relief Update
Customer Relief Update $1.9 B (16%) Deferrals & Extensions as of 2Q20 Total Modifications Consumer Commercial 12% Outstandings 21% Outstandings Consumer 7% Forbearance Principal 8% 17% Commercial Extension 9% 4% Interest 1% P&I 3% No Modification No Modification No Modification 88% 79% 84% 10
Slide 11: Customer Relief Update
Customer Relief Update • 17,300 Accounts as of June 30th • Deceleration in Activity Since Peak in April Weekly Payment Deferrals Granted $250 $600 $500 $200 $400 $150 $300 millions $100 millions $200 $50 $100 $0 $0 New Consumer New Commercial 11
Slide 12: Consumer Customer Relief
Consumer Customer Relief $0.8 B (7%) 73% Secured with 61% Weighted Average LTV 49% Made at Least One Payment in 2Q20† • 60% Wtd Avg LTV • 716 Wtd Avg FICO • 783 Wtd Avg FICO • 37% <700 FICO • 3% <700 FICO/>70% LTV Other $62MM 8% • 66% Wtd Avg CLTV • 757 Wtd Avg FICO Home Equity $115MM • 9% <700 FICO
Slide 13: Commercial Customer Relief
Commercial Customer Relief $1.1 B (9%) 89% Secured with 51% Weighted Average LTV 92% Made at Least One Payment in 2Q20† • 51% Wtd Avg LTV • 49% Wtd Avg LTV • $3.0MM Avg Loan • $2.2MM Avg Loan C&I Secured $108MM (10%) Commercial C&I Mortgage Unsecured $829MM $108MM (79%) • $0.2MM Avg Loan (10%) Leasi
Slide 14: High Risk Industries
High Risk Industries $1.4B (12%) / $1.3 B (11%) Excluding PPP Lodging` retail lodging retail all others 14
Slide 15: Retail
Retail $0.6 B (5%) - Excluding PPP • 91% Real Estate Secured • 54% Wtd Avg LTV • Average Exposure $3.2 MM • Largest Exposure $36 MM • 68% of Portfolio has an LTV ≤ 65% • 96.2% is Secured or has Essential Anchor • 1.7% Unsecured and Deferred • 99.9% Paying Interest 15
Slide 16: Lodging
Lodging $0.5 B (4%) - Excluding PPP • 77% Real Estate Secured • 50% Wtd Avg LTV • Average Exposure $8.7 MM • Largest Exposure $40 MM • 85% of Portfolio has an LTV ≤ 65% • 94% of Unsecured Outstandings to Global Hotel and Timeshare Brands • 0.4% Unsecured and Deferred • 100% Paying Interest 16
Slide 17: Restaurant/Entertainment
Restaurant/Entertainment $0.1 B (1%) - Excluding PPP • 39% Real Estate Secured • 63% Wtd Avg LTV • Average Exposure $1.8 MM • Largest Exposure $23 MM • 48% of Portfolio has an LTV ≤ 65% • $23.5 MM Unsecured and Deferred • Average Exposure $0.4 MM • 96.9% Paying Interest 17
Slide 18: Financial Overview
Financial Overview
Slide 19: History of Loan Growth
History of Loan Growth $ in millions Long History of Stable Loan Growth 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q 2Q 2020* 2020** Consumer Commercial *1Q 2020 includes $161MM in COVID-19 line draws **2Q 2020 includes $53MM in COVID-19 line dr
Slide 20: Second Quarter 2020 Loan Growth
Second Quarter 2020 Loan Growth $ in millions Loan Growth in Q2 Driven by PPP Loans 543 (107) 11,805 61 (101) 56 11,353 1Q Total Loans Commercial Mortgage Other PPP COVID Line 2Q Total Loans Consumer Paydowns 20
Slide 21: History of Deposit Growth by Segment
History of Deposit Growth by Segment $ in millions Long History of Core Deposit Growth 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q 20202Q 2020 Consumer Business Public 21
Slide 22: Second Quarter 2020 Deposit Growth
Second Quarter 2020 Deposit Growth $ in millions $1.4 B of Growth Driven by Core Customers 198 30 (41) 17,423 442 738 16,055 1Q Total Commercial Consumer PPP Economic Public 2Q Total Deposits Impact Deposits Payments 22
Slide 23: Deposit Rate Trends
Deposit Rate Trends $ in millions Well-Managed Deposit Rates and Funding Costs Remain Low 18,000 0.6% 17,500 0.48% 0.5% 0.46% 0.46% 17,000 0.44% 0.43% 0.40% 0.40% 0.38% 0.4% 16,500 0.31% 16,000 0.3% 15,500 0.22% 0.19% 0.2% 0.16% 15,000 0.1% 14,500 14,000 0.0% Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-1
Slide 24: Strong Liquidity
Strong Liquidity Loan to Deposit Ratio Compared with Peers Ample Liquidity to Fund Continued Growth 110% 98% 98% 100% 93% 93% 94% 94% 93% 91% 91% 91% 90% 87% 83% 85% 83% 84% 79% 80% 70% 71% 70% 68% 70% 66% 63% 61% 59% 60% 54% 55% 52% 51% 51% 50% 40% 30% 20% 2007 2008 2009 2010 2011 2012 2013 2014 20
Slide 25: Investment Portfolio & Duration
Investment Portfolio & Duration $ in millions Total Investment Portfolio 8,000 AFS HTM Premium Amortization 12 6,003 10 6,000 5,610 5,685 7.5 8 5.8 6.2 4,000 6 2,960 3,004 3,277 4 2,000 2 2,650 2,681 2,726 0 - 2Q 2019 1Q 2020 2Q 2020 Duration 2Q 2019 1Q 2020 2Q 2020 3.54 3.18 3.11 3.28 2.92 2.76 2.8
Slide 26: Fortress Capital Position Improving
Fortress Capital Position Improving Growth in Risk-Based Capital, Well in Excess of Required Minimums 13.3% 77.5% 13.1% 12.0% 11.8% 12.0% 11.8% 59.0% 10.0% 10.0% 55.3% 8.0% 8.0% 8.0% 8.0% 6.5% 6.5% 6.0% 6.0% 4.5% 4.5% 1Q20 CET1 2Q20 CET1 1Q20 Tier 1 2Q20 Tier 1 1Q20 Total 2Q20 Total BOH 1Q20 BOH 2Q2
Slide 27: Significant Excess Capital
Significant Excess Capital $ in millions Generating Significant Capital in Excess of Regulatory and Well- Capitalized Minimums $450 $552 $757 $274 $274 $274 $1,094 $821 $615 Common Equity Tier 1 Capital Tier 1 Capital Total Capital Regulatory Minimum Well-Capitalized Excess Note: Values noted are pr
Slide 28: Financial Summary
Financial Summary $ in millions, except per share amounts 2Q 2020 1Q 2020 2Q 2019 ∆ 1Q 2020 ∆ 2Q 2019 Net Interest Income $ 126.7 $ 126.0 $ 124.1 $ 0.7 $ 2.6 Noninterest Income 51.3 46.1 45.4 5.2 5.9 Total Revenue 178.0 172.1 169.5 5.9 8.5 Noninterest Expense 88.9 96.3 92.7 (7.4) (3.8) Operating Inc
Slide 29: Performance Metrics
Performance Metrics 2Q 2020 1Q 2020 2Q 2019 ∆ 1Q 2020 ∆ 2Q 2019 Return on Assets 0.82% 0.77% 1.31% 0.05% -0.49% Return on Equity 11.58% 10.64% 17.97% 0.94% -6.39% Net Interest Margin 2.83% 2.96% 3.04% -0.13% -0.21% Efficiency Ratio 50.0% 56.0% 54.7% -6.0% -4.7% 29
Slide 30: Bank of Hawaii Corporation Second Quarter 2020 Financial Results
Bank of Hawaii Corporation Second Quarter 2020 Financial Results July 27, 2020
Slide 31: Appendix
APPENDIX
Slide 32: Residential Mortgage Current LTV
Residential Mortgage Current LTV 32
Slide 33: Residential Mortgage Monitoring FICO
Residential Mortgage Monitoring FICO 33
Slide 34: Home Equity Current CLTV
4 Bank of Hawaii Home Equity Current CLTV Home Equity - Current CLTV 90% | Wtd Avg: 58% 40% 30% 20% 0% = A a Fg gH Me a No at Oe ae ag OM oh gate” gate” ash” athe” sh” gh” este” ogee” Cumulative Percentage g 34
Slide 35: Home Equity Monitoring FICO
Home Equity Monitoring FICO 35
Slide 36: Automobile DTI
4 Bank of Hawaii Automobile DTI Automobile - DTI = 80% 70% 60% 40% 30% 20% -. 20 a & oe” og o” = oe? i oe? 6 ? o? & SF Cumulative Percentage wo ws es ¥ x * AY 36
Slide 37: Automobile Monitoring FICO
Automobile Monitoring FICO 37
Slide 38: Other Consumer Delinquency Status
Other Consumer Delinquency Status 38
Slide 39: Other Consumer Monitoring FICO
Other Consumer Monitoring FICO 39
Slide 40: Commercial & Industrial Leveraged vs Non-Leveraged
Commercial & Industrial Leveraged vs Non-Leveraged 40
Slide 41: Commercial Mortgage Current LTV
Commercial Mortgage Current LTV 41
Slide 42: Commercial Mortgage Detail Current LTV
Commercial Mortgage Detail Current LTV 42
Slide 43: Construction Current LTV
4 Bank of Hawaii Construction Current LTV Construction - Current LTV Wtd Avg: 56% All| 40% 30% 20% 10% I I a oe re oe of as ot o ot we sor g g g Cumulative Percentage 43
Slide 44: Lease Financing Leveraged vs Non-Leveraged
Lease Financing Leveraged vs Non-Leveraged 44
Slide 45: PPP Loans
PPP Loans Loan Size # of Loans Loan Amount ($MM) • Originated more than 4,500 PPP loans for $562MM < $150M 3,805 $132.9 through June 30 $150M - $350M 388 $85.8 • Average loan size of $124,000 $350M - $2MM 290 $210.4 • 84% of loans less than $2MM - $5MM 32 $91.1 $150,000 >$5MM 6 $41.7 Total 4,521 $56
Slide 46: Strong Mix of Deposits
Strong Mix of Deposits As of June 30, 2020 Solid Base of Core Customers and Core Deposits Public Time Funds 10% 8% Commercial 42% Checking Savings 51% Consumer 39% 50% 92% Core Consumer and 90% Core Checking and Commercial Customers Savings Deposits 46
Slide 47: Conservative Investment Portfolio
Conservative Investment Portfolio As of June 30, 2020 Investment Securities Portfolio Consists of High-Quality Securities. Sector Muni 2% Corp 3% • 95% AAA-rated, 100% A-rated or higher • Highly liquid and pledgeable Government / Agency 95% • Secure and reliable cash flows Moody’s Rating Cash Flow A
Slide 48: Disciplined Capital Management
Disciplined Capital Management $ in millions $300 $250 $200 $150 $100 $50 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q 2020 2Q 2020 Dividends Repurchases Retained for Growth Net Income 48
Slide 49: Unbroken History of Dividends
Note: Historical dividends adjusted for stock splits. YTD 2020 dividend dividend annualized. 2020 YTD HistoricalNote: dividends adjusted for stocksplits. Unbroken HistoryDividendsof $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 1986 1987 1988 Recession 1989 1990 1991 and UnbrokenLong History of Dividend
Slide 50: History of Deposit Growth by Product
History of Deposit Growth by Product $ in millions 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q 2020 2Q 2020 NIB IB Savings Time 50