Bank Of Hawaii Corporation · NYSE:BOH
Bank Of Hawaii — Q2 2024 Earnings Presentation
42 slides from Bank Of Hawaii's earnings presentation, Jul 22, 2024
Slide 1: Second quarter 2024 financial report
Bank of Hawai‘i Corporation second quarter 2024 financial report July 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 • $0.81 diluted earnings per common share • industry-wide FDIC special assessment and other normalizing items impacted diluted earnings per common share by $0.07 earnings highlights • 1.81% average cost of total deposits • net interest margin expanded by 4 basis points to 2.15% • 10.41% r
Slide 4: Highlights – balance sheet
highlights – balance sheet $ in billions stable average total deposits stable average total loans and leases $13.9 $13.9 $13.8 $20.0 $20.5 $20.4 2Q23 1Q24 2Q24 2Q23 1Q24 2Q24 tier 1 capital ratio total capital ratio 15.05% 13.99% 13.81% 12.74% 13.24% 12.21% 6/30/23 3/31/24 6/30/24 6/30/23 3/31/24 6/
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: 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 27.8 21% The Private Bank 18.3 >20 years 52% Small Business 17.0 Community 22.4 <10 years 26% total 23.1 note: as of June 30, 2024, numbers may not add up due to rounding 7 (1): excludes public products and Bank of Ha
Slide 8: Stable deposit balances
stable deposit balances $ in billions average balances $20.3 $20.4 $20.5 $20.7 $20.5 $20.4 $20.0 $13.5 $14.0 $14.7 $15.0 $14.0 $15.0 $15.0 $6.9 $6.4 $6.0 $5.8 $5.7 $5.6 $5.4 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 noninterest-bearing deposits interest-bearing deposits note: numbers may not add up due to
Slide 9: Cost of funds: interest-bearing deposits
cost of funds interest-bearing deposits 2.91% 2.73% 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 BOH KRX median source: S&P Capital IQ; KBW Regional Banking Index (KRX) 9
Slide 10: Cost of funds: total deposits
cost of funds total deposits 2.19% 2.10% 1.85% 1.82% 1.81% 1.80% 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 Apr-24 May-24 Jun-24 BOH KRX median source: S&P Capital IQ; KBW Regional Banking Index (K
Slide 11: Deposit beta performance
deposit beta performance 39.7% 38.0% 33.4% 33.6% 33.4% 33.5% 33.7% 32.3% 30.9% 28.7% 26.1% 23.1% 21.0% 15.4% 15.9% 11.5% 9.6% 7.1% 3.2% 3.5% 0.0% 0.0% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 Apr-24 May-24 Jun-24 BOH KRX median source: S&P Capital IQ; KBW Regional Banking Index (KRX) 11
Slide 12: 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 experience & forecast Mar-21 Apr-21 Hawai‘i unemployment May-21 Jun-21 Jul-21 unemployment Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 source for national unemployme
Slide 13: 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) 13
Slide 14: 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) 14
Slide 15: Stable real estate prices
stable real estate prices Oahu market indicators – 1H 2024 single family homes condominiums 1H-24 1H-23 Δ 1H-23 1H-24 1H-23 Δ 1H-23 3.3% 2.0% median sales $1,085 $1,050 $510 $500 price (000s) 6.7% closed sales 1,362 1,277 2,234 2,372 -5.8% 7 days median days 20 25 29 22 on market 5 days source: Hono
Slide 16: Credit performance
AN Bank of Hawaii Corporation | credit performance
Slide 17: 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 June 30, 2024 17
Slide 18: Steady organic loan growth
steady organic loan growth $ in billions average total loans and leases $13.9 $13.9 $13.8 $12.9 $12.0 $11.6 $10.7 2019 2020 2021 2022 2023 1Q24 2Q24 18
Slide 19: Consumer portfolio
consumer portfolio 58% of total loans wtd home equity % total % total avg $2.2 asset type consumer loans WALTV FICO residential mortgage 57% 33% 49% 805 $8.0B home equity 28% 16% 46% 790 residential consumer mortgage automobile 10% 6% n/a 734 $4.6 automobile $0.8 other consumer 5% 3% n/a 759 other t
Slide 20: Commercial portfolio
commercial portfolio 42% of total loans CRE $3.7 % total % total asset type comml loans WALTV residential commercial real estate 64% 27% 55% mortgage $5.8B commercial & industrial 29% 12% n/a commercial construction 6% 2% 55% leasing 1% 0.4% n/a construction total commercial 100% 42% 55% C&I $0.3 ho
Slide 21: Stable real estate market
stable real estate market Oahu market vacancies and inventory vacancy inventory (sq ft) 1Q24 1Q23 10 yr avg 10 yr CAGR industrial 0.76% 0.81% 1.75% 0.28% office 13.56% 13.66% 12.46% - 1.08% retail 5.90% 5.10% 5.91% 0.74% multi-family 4.10% 4.40% 4.67% 0.70% source: Colliers (industrial, office, reta
Slide 22: Commercial real estate (CRE)
commercial real estate (CRE) 27% of total loans 1,000 $913.9 900 800 $726.7 700 $677.1 600 $578.2 $millions 500 $474.8 7% 400 $375.8 5% 5% 300 4% 3% 200 3% 100 0 multi-family industrial retail lodging office other wtd avg LTV 58% 56% 54% 53% 56% 51% % owner n/a 41% 4% n/a 20% 29% avg exposure $3.0 $
Slide 23: CRE scheduled maturities
CRE scheduled maturities < 5% maturing in 2024 2,500 52.4% 2,000 1,500 $millions 1,000 12.6% 500 10.0% 7.4% 8.4% 4.6% 4.6% 0 2024 2025 2026 2027 2028 2029 2030+ 23
Slide 24: Loan balances by LTV
loan balances by LTV LTV > 80% - $31MM, 0.8% of CRE 2,500 61.1% 2,000 1,500 $millions 1,000 22.3% 15.7% 500 0.7% 0.1% 0.0% 0 ≤ 60% > 60% to 70% > 70% to 80% > 80% to 85% > 85% to 90% > 90% 24
Slide 25: 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% 0.10% 0.11% $0 0.1 5% $0 0.07% 0.08% 0.08% 0.09% 0.04% 0.1 0% $0 0.0 5% $0 0.0 0% $0 2Q23 1Q24 2Q24 YTD24 2Q23 1Q24 2Q24 $0 NCOs/average loans NPAs/period-end loans plus OREO $0 $0 delinquencies criticized 3.0
Slide 26: Financial update
AN Bank of Hawaii Corporation | financial update
Slide 27: NII and NIM
NII and NIM $ in millions $113.9 $114.8 positive • repricing from cashflows and other: +$4.6 negative • deposit mix shift and repricing: $(2.9) • reduction in earning assets from deposits: 2.11% 2.15% $(1.1) non-recurring • interest recovery: +$0.3 1Q24 2Q24 NII NIM 27 note: numbers may not add up d
Slide 28: Cashflows repricing
cashflows repricing $ in millions $350 $310 maturities & prepayments $300 $250 $200 $161 $150 $122 $100 $50 $- 2Q24 fixed loans adjustable loans inv. portfolio matured/run-off yield & reinvestment opportunity 8.0% 7.5% 6.9% 7.0% 6.0% 5.4% 5.0% 4.2% 3.9% 4.0% 3.3% 3.3% 3.0% 3.0% 2.1% 2.0% 1.0% 0.0% -
Slide 29: NII and NIM trends
NII and NIM trends $ in millions stabilizing NII and NIM $142 $141 $136 $133 2.60% 2.60% $125 $124 2.47% 2.47% $121 2.34% $116 $115 $114 2.22% 2.15% 2.13% 2.13% 2.11% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 NII NIM 29
Slide 30: Avg total earning assets yield
avg total earning assets yield in basis points earning assets continue to reprice higher 399 385 389 372 356 342 317 284 260 244 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 30
Slide 31: Noninterest income
noninterest income $ in millions steady core noninterest income reported noninterest income core noninterest income $43.3 $42.3 $42.1 $42.3 $41.7 $42.1 normalizing items: -$1.5 sale of a low-income housing tax credit investment 2Q23 1Q24 2Q24 2Q23 1Q24 2Q24 note: numbers may not add up due to roundi
Slide 32: Noninterest expense
noninterest expense $ in millions continued discipline in expense management reported noninterest expense core noninterest expense $109.2 $104.0 $105.9 $105.3 $104.0 $103.2 normalizing items: -$2.6 FDIC normalizing special items: assessment -$2.2 seasonal -$0.8 separation payroll -$0.6 other -$0.5 s
Slide 33: Financial summary
financial summary $ in millions, except per share amounts 2Q 2024 1Q 2024 2Q 2023 ∆ 1Q 2024 ∆ 2Q 2023 net interest income $ 114.8 $ 113.9 $ 124.3 $ 0.9 $ (9.5) noninterest income 42.1 42.3 43.3 (0.2) (1.2) total revenue 156.9 156.2 167.6 0.7 (10.7) noninterest expense 109.2 105.9 104.0 3.4 5.2 opera
Slide 34: Capital
capital strong risk-based capital 15.05% 13.99% 13.81% 13.24% 12.74% 13.6% 77.7% 1 12.21% 5.05% 11.50% 11.59% 3.81% 11.00% 3.24% 5.99% 4.74% 60.1% 60.2% 4.21% 5.00% 5.09% 8.37% 4.50% 7.62% 7.21% 3.37% 2.62% 2.21% 10.00% 10.00% 10.00% 8.00% 8.00% 8.00% 6.50% 6.50% 6.50% 5.00% 5.00% 5.00% 0.00% 0.00%
Slide 35: Takeaways
takeaways ✔ high quality and low cost deposit base in unique and competitively advantageous deposit market ✔ increase in NII and NIM ✔ exceptional credit quality ✔ strong liquidity ✔ strong risk-based capital 35
Slide 36: Q&A
AN Bank of Hawaii Corporation | Q&A
Slide 37: Appendix
AN Bank of Hawaii Corporation | appendix
Slide 38: Insured/collateralized deposits
insured/collateralized deposits uninsured/ uncollateralized insured 41% 50% uninsured/ collateralized 10% note: as of June 30, 2024, numbers may not add up due to rounding 38
Slide 39: 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 $10.0B cash securities available $8.3B FHLB uninsured/ uncollateralized FRB deposits note: as of June 30, 2024, cash includes fed funds sold
Slide 40: 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% source: Colliers (industrial, office, retail) as of 1Q24; CoStar (multi-family) as of 2Q24 40
Slide 41: CRE office
CRE office 3% of total loans scheduled maturity 300 LTV distribution 250 200 42.4% $ millions LTV > 60% to 150 36.1% 70% 27% 100 10.9% 50 2.8% 5.1% 0.4% 2.3% LTV > 70% to - $376MM 80% 12% 2024 2025 2026 2027 2028 2029 2030+ LTV > 80% highlights 6% LTV ≤ 60% • 56% wtd avg LTV 55% • $1.7MM average exp
Slide 42: CRE multi-family
CRE multi-family 7% of total loans scheduled maturity 700 LTV distribution 65.8% 600 500 $ millions LTV > 60% to 70% 400 30% 300 200 8.3% 10.0% 100 7.0% 2.1% 3.0% 3.8% LTV > 70% to $913MM - 80% 2024 2025 2026 2027 2028 2029 2030+ 21% highlights LTV ≤ 60% 49% LTV > 80% • 58% wtd avg LTV 0.0% • $3.0MM