Bank Of Hawaii Corporation · NYSE:BOH
Bank Of Hawaii — Q1 2023 Earnings Presentation
42 slides from Bank Of Hawaii's earnings presentation, Apr 24, 2023
Slide 1: First quarter 2023 financial report
Bank of Hawai‘i Corporation first quarter 2023 financial report April 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: A community bank approach
a community bank approach coveted 125 diversified, long year old tenured deposit brand base exceptional credit quality traditional community strong liquidity bank focus exceptional deposit broad & performance diversified, lower deep market risk loan assets penetration 3
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: S&P Capital IQ FDIC Annual Summa
Slide 6: Distributed
distributed # depositors fully FDIC insured average consumer account balance 98% $18,000 $ balances FDIC uninsured/ average commercial uncollateralized account balance 42% $133,000 note: as of March 31, 2023 6
Slide 7: Diversified deposit base
diversified deposit base other 2.4% agency 12.4% public and state other 18.2% 8.5% county 67.0% commercial 41.9% governmental consumer 49.6% high net worth mass 23.7% market 39.2% mass affluent overall 37.1% note: as of March 31, 2023 consumer 7
Slide 8: Diversified deposit base: commercial deposits by sector
diversified deposit base commercial deposits by sector real estate and rental and leasing 18.4% finance and insurance 11.7% health care and social assistance 9.6% title companies 8.2% accommodation and food services 7.8% construction 5.9% retail trade 5.5% other services (except public administratio
Slide 9: Highly operational in nature
highly operational in nature time 9.4% overall demand: 52% 95% of Commercial deposits non-interest are with relationships with bearing demand multiple deposit accounts 31.2% (3.7 accounts per relationship) savings 38.5% 71% of Consumer deposits are with relationships with multiple deposit accounts i
Slide 10: Quarterly deposit mix shift
quarterly deposit mix shift $ in billions 110% $20.6 $20.5 $20.0 67% 69% 90% $15.0 70% 50% $10.0 30% $5.0 33% 31% 10% 12/31/22 3/31/23 -10% $0.0 nib deposits ib deposits note: ib represents interest-bearing deposits (incl savings and time) and nib represents noninterest-bearing deposits 10
Slide 11: Tenured deposit base
tenured deposit base 23% 10-20 years 51% >20 years 26% <10 years note: as of March 31, 2023 11
Slide 12: Stable 2022 and Q1-23 deposit balances
stable 2022 and Q1-23 deposit balances $ in billions $25 $20.7 $21.0 $20.9 $20.6 $20.6 $20.5 $20.4 $20.5 $20 $15 $10 $5 $0 public and other deposits commercial deposits consumer deposits 12
Slide 13: Deposit balance by segment
deposit balance by segment $ in millions consumer commercial public and other $10,304 $10,159 $8,570 $8,594 $1,742 $1,738 balance balance balance operating savings time 13
Slide 14: Deposit beta performance
deposit beta performance 18.0% 15.9% 16.0% 14.0% 12.0% 11.5% 10.0% 8.0% 7.1% 6.0% 4.0% 3.2% 2.0% 0.0% 0.0% 1Q22 2Q22 3Q22 4Q22 1Q23 total deposit beta note: beta calculated as change in average total deposit rate divided by change in average Fed Funds rate 14
Slide 15: Deposit cost
deposit cost 1.20% 1.09% 40 bps ∆ 1.00% 0.75% 0.80% 0.69% 29 bps ∆ 39 bps ∆ 0.60% 0.46% 26 bps ∆ 0.40% 0.30% 19 bps ∆ 0.20% 13 bps ∆ 0.20% 0.09% 0.11% 0.06% 0.07% 0.05% 4 bps ∆ 0.07% -2 bps ∆ -2 bps ∆ -1 bps ∆ 2 bps ∆ 0 bps ∆ 0.00% 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 ib deposit cost total deposit cost not
Slide 16: Liquidity lines
liquidity lines $ in billions Bank of Hawai'i carries substantial liquidity lines and equivalents for both day-to-day operational purposes as well as for liquidity back stop purposes. The high quality of our asset base provides us with ample access. overnight Fed Funds $0.8 FRB & FHLB borrowing 7.1
Slide 17: Assets
4h Bank of Hawai'i Corporation | assets
Slide 18: Conservative and liquid investment portfolio
conservative and liquid investment portfolio high-quality investment portfolio sector Moody’s rating government/agency AAA 89% 89% muni AA 1% 2% corp A 10% 9% note: as of March 31, 2023 18
Slide 19: Lending philosophy
lending philosophy we lend in markets we know and to relationships we understand Hawai'i 89% U.S. mainland West Pac 6% 5% note: as of March 31, 2023 19
Slide 20: Loan portfolio
loan portfolio $13.8 B as of 1Q23, excluding PPP 80% of portfolio secured with real estate with combined weighted average loan to value of 55% C&I residential 10% mortgage 34% 40% commercial 60% consumer 73% real estate secured 84% real estate secured wtd avg LTV 56% wtd avg LTV 54% 56% w/ BOH ≥ 10
Slide 21: Commercial real estate
commercial real estate $3.8B (28%) as of 1Q23, with $383 million (3%) in office asset type % total loans wtd avg LTV multi-family 6.6% 59% industrial 5.5% 57% retail 5.2% 55% lodging 4.1% 55% $13.8B non-office CRE total loans 25% office 2.8% 56% specialty 2.9% 53% office other 0.6% 46% 3% total CRE
Slide 22: CRE office
CRE office $383.4 MM (3%) as of 1Q23 • 56% wtd avg LTV • $1.8MM average exposure • 25% CBD (Downtown HNL) with 63% wtd avg LTV - 47% with repayment guaranties • 3% maturing through 2024 wtd avg LTV: 56% 22
Slide 23: Commercial real estate tail risk
commercial real estate tail risk $35 million (0.9% of CRE) with LTV > 80% asset type % CRE LTV > 60% to 70% 25% multi-family 0.66% industrial 0.16% retail 0.07% $3.8B lodging 0.00% LTV > 70% to CRE 80% 16% office 0.03% specialty 0.00% LTV ≤ 60% 58% other 0.00% LTV > 80% 0.9% total LTV > 80% 0.92% 23
Slide 24: Consumer production quality
consumer production quality residential mortgage home equity 900 803 100% 900 798 796 800 807 798 798 787 100% 765 764 771 767 765 769 90% 90% 800 800 80% 80% 700 700 65% 67% 65% 67% 62% 61% 70% 63% 62% 63% 70% 600 600 56% 59% 56% 55% 51% 60% 60% 500 500 50% 50% 400 400 40% 40% 300 300 30% 30% 200 2
Slide 25: Commercial production quality
commercial production quality commercial real estate construction 62% 62% 62% 62% 62% 64% 63% 62% 64% 62% 63% 59% 56% 56% 2018 2019 2020 2021 2022 2023YTD port 2018 2019 2020 2021 2022 2023YTD port wtd avg LTV wtd avg LTV C&I (excl PPP) 17% 8% 7% 6% 4% 2% 2% 2018 2019 2020 2021 2022 2023YTD port lev
Slide 26: Credit quality
credit quality 0.4 0% net charge-offs 0.3 5% non-performing assets 0.3 0% 0.2 5% $0 0.16% 0.2 0% $0 0.1 5% $0 0.08% 0.1 0% 0.09% 0.09% $0 0.05% 0.05% 0.0 5% $0 0.0 0% $0 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 $0 NCOs/average loans NPAs/period-end loans plus OREO $0 0.4 0% delinquencies criticized $0 0.3 5% 0
Slide 27: Reserve trend
reserve trend $ in millions allowance for credit losses $250 1.81% 1.73% ACL Coverage 1.63% 1.47% 1.50% $200 1.39% 1.29% 1.22% 1.21% 1.15% 1.10% 1.06% 1.04% 0.99% $150 $216.3 $100 $203.5 $198.3 $173.4 $180.4 $167.9 $157.8 $152.0 $148.5 $146.4 $144.4 $143.6 $138.2 $50 $108.3 $0 day 1 1Q20 2Q20 3Q20 4
Slide 28: Financial update
4h Bank of Hawai'i Corporation | financial update
Slide 29: Net interest income
net interest income $ in millions 1Q 2023 4Q 2022 1Q 2022 ∆ 4Q 2022 ∆ 1Q 2022 net interest income reported $ 136.0 $ 140.7 $ 125.3 $ (4.8) $ 10.7 normalizing items: normalized +$1.6 day count 137.8 140.6 125.0 (2.9) 12.7 +$0.3 lease EBO net interest margin reported 2.47 % 2.60 % 2.34 % (0.13) % 0.13
Slide 30: NII
NII $ in millions $12.1 $140.7 $136.0 $6.5 ($0.8) ($1.9) ($2.0) ($5.9) ($12.9) 4Q22 NII 1Q23 NII note: numbers may not add up due to rounding; normalizing items include day count and lease EBO 30
Slide 31: Cashflow and repricing
cashflow and repricing projected repricing, maturities & prepayments ($ in billions) $3.5 $6.5B $6.5B $3.0 $2.7 $2.7 $2.5 $2.1 $2.0 $2.0 $1.5 $1.1 $1.0 $0.8 $0.9 $0.7 $0.5 $0.0 yr 1 yr 2 loans repricing loans maturing/prepayments inv. portfolio maturing/prepayments inv. portfolio repricing & fed fun
Slide 32: Noninterest income
noninterest income $ in millions 1Q 2023 4Q 2022 1Q 2022 ∆ 4Q 2022 ∆ 1Q 2022 noninterest income reported $ 40.7 $ 41.2 $ 43.6 $ (0.4) $ (2.8) normalizing item: +$0.6 Visa Class B normalized conversion ratio adjustment 41.3 41.2 43.6 0.1 (2.2) trust & asset management 10.7 10.7 11.3 0.0 (0.6) mortgag
Slide 33: Noninterest expense
noninterest expense $ in millions 1Q 2023 4Q 2022 1Q 2022 ∆ 4Q 2022 ∆ 1Q 2022 noninterest expense reported $ 111.9 $ 102.7 $ 103.9 $ 9.2 $ 8.0 normalizing items: -$4.0 seasonal payroll normalized -$3.1 separation 104.9 102.7 100.2 2.1 4.7 efficiency ratio reported 63.34 % 56.46 % 61.53 % 6.88 % 1.81
Slide 34: Financial summary
financial summary $ in millions, except per share amounts 1Q 2023 4Q 2022 1Q 2022 ∆ 4Q 2022 ∆ 1Q 2022 net interest income $ 136.0 $ 140.7 $ 125.3 $ (4.8) $ 10.7 noninterest income 40.7 41.2 43.6 (0.4) (2.8) total revenue 176.7 181.9 168.8 (5.2) 7.9 noninterest expense 111.9 102.7 103.9 9.2 8.0 opera
Slide 35: Capital
capital 14.0% 13.2% 13.1% 12.2% 12.1% 12.0% 13.6% 10.9% 10.9% 3.2% 3.1% 10.0% 4.2% 4.1% 4.4% 4.4% 8.0% 7.4% 7.2% 6.0% 2.4% 2.2% 10.0% 10.0% 4.0% 8.0% 8.0% 6.5% 6.5% 5.0% 5.0% 2.0% 0.0% 4Q22 1Q23 4Q22 1Q23 4Q22 1Q23 4Q22 1Q23 CET1 tier 1 capital total capital tier 1 leverage well-capitalized excess n
Slide 36: Takeaways
takeaways ✔ unique and competitively advantageous deposit market ✔ exceptional deposit base ✔ substantial liquidity back up ✔ high quality assets ✔ solid regulatory capital 36
Slide 37: Q&A
4 Bank of Hawai'i Corporation | Q&A
Slide 38: Appendix
4h Bank of Hawai'i Corporation | appendix
Slide 39: Unemployment experience and forecast
unemployment experience & forecast 22.6% 4.3% 4.0% 4.1% 3.5% 2.2% Jul-20 Nov-20 Jul-21 Nov-21 Jul-22 Nov-22 2Q23 3Q23 4Q23 Jan-20 Apr-20 Sep-20 Oct-20 Jan-21 Apr-21 Sep-21 Oct-21 Jan-22 Apr-22 Sep-22 Oct-22 Jan-23 Dec-20 Dec-21 Dec-22 Feb-20 Mar-20 May-20 Jun-20 Feb-21 Mar-21 Feb-22 Mar-22 Aug-20 Ma
Slide 40: 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) 40
Slide 41: 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) 41
Slide 42: Stable real estate prices
stable real estate prices Oahu market indicators – Mar 2023 single family homes condominiums Mar 2023 Mar 2022 Mar 2019 Δ Mar 2022 Δ Mar 2019 Mar 2023 Mar 2022 Mar 2019 Δ Mar 2022 Δ Mar 2019 38.5% 4.0% 24.9% median sales price $1,084 $1,150 $783 $536 $516 $429 (000s) -5.8% 1.1 months 0.9 months mont