Average Deposits Up 0.4% Linked Quarter
Diluted Earnings Per Common Share $1.14
Net Income $46.8 Million
Board of Directors Declares Dividend of $0.70 Per Common Share

Bank of Hawai‘i Corporation (NYSE:BOH) today reported diluted earnings per common share of $1.14 for the first quarter of 2023, compared with diluted earnings per common share of $1.50 in the previous quarter and $1.32 in the same quarter of 2022. Net income for the first quarter of 2023 was $46.8 million, down 23.6% from the previous quarter and down 14.6% from the same quarter of 2022. The return on average common equity for the first quarter of 2023 was 15.79% compared with 21.28% in the previous quarter and 15.44% in the same quarter of 2022.

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"Amidst a challenging macro environmental backdrop, Bank of Hawai‘i delivered solid operating performance in the first quarter of 2023," said Peter Ho, Chairman, President, and CEO. "Average deposits grew 0.4% in the first quarter and were essentially flat from a year ago. Spot deposit balances were down 0.6% from the prior quarter and down 1.1% from the prior year. Deposit costs, while rising, continue to show the benefits of our unique Hawai‘i deposit base which is diversified and long tenured. Loans grew 1.3% on a linked quarter basis with growth across both our consumer and commercial portfolios. Credit quality remains excellent. Non-performing assets were lower on both a linked quarter and year on year basis. Annualized net charge-offs were 0.08% during the quarter."

Financial Highlights

Net interest income for the first quarter of 2023 was $136.0 million, a decrease of 3.4% from the previous quarter and an increase of 8.5% from the same quarter of 2022. The decrease in net interest income in the first quarter of 2023 compared to the prior quarter was due to two fewer days in the quarter, which reduced net interest income by approximately $1.6 million, as well as higher funding costs, partially offset by loan growth and higher earning asset yields. The increase in net interest income compared to the same period in 2022 was primarily due to loan growth and higher earning asset yields, partially offset by higher funding costs.

Net interest margin was 2.47% in the first quarter of 2023, a decrease of 13 basis points from the previous quarter and an increase of 13 basis points from the same quarter of 2022. The decrease in net interest margin in the first quarter of 2023 compared to the prior quarter was due to higher funding costs, partially offset by higher earning asset yields. The increase in net interest margin from the same period in 2022 was primarily due to higher earning asset yields, partially offset by higher funding costs.

The average yield on loans and leases was 4.03% in the first quarter of 2023, up 22 basis points from the prior quarter and up 93 basis points from the same quarter of 2022. The average yield on total earning assets was 3.42% in the first quarter of 2023, up 25 basis points from the prior quarter and up 98 basis points from the same quarter of 2022. The average cost of interest-bearing deposits was 1.09% in the first quarter of 2023, up 40 basis points from the prior quarter and up 102 basis points from the same quarter of 2022. The average cost of total deposits, including noninterest-bearing deposits, was 0.75%, up 29 basis points from the prior quarter and up 70 basis points from the same quarter of 2022. The changes in yields and rates over the linked quarter and year over year period reflected the higher rate environment, including higher benchmark interest rates.

Noninterest income was $40.7 million in the first quarter of 2023, a decrease of 1.1% from the previous quarter and a decrease of 6.5% from the same period in 2022. Noninterest income in the first quarter of 2023 included a negative adjustment of $0.6 million related to a change in the Visa Class B conversion ratio. Adjusted for this item, noninterest income in the first quarter was $41.3 million, up 0.3% from the prior quarter and down 5.2% from the same period in 2022. The decrease in noninterest income compared to the same period in 2022 was due to lower customer swap transactions and lower mortgage banking income.

Noninterest expense was $111.9 million in the first quarter of 2023, an increase of 9.0% from the previous quarter and an increase of 7.7% from the same quarter of 2022. Noninterest expense in the first quarters 2022 and 2023 included seasonal payroll expenses of approximately $3.7 million and approximately $4.0 million, respectively. In addition, noninterest expense in the first quarter of 2023 included separation expenses of $3.1 million. Adjusted for these items, noninterest expense for the first quarter of 2023 was $104.9 million, an increase of 2.1% from the prior quarter and 4.7% from adjusted noninterest expense in same period in 2022. The linked quarter increase was primarily due to an industry-wide increase in FDIC insurance expense of $1.5 million. The increase from the same period in 2022, adjusting for nonrecurring items in both periods, was primarily due to higher salaries and benefits expense of $1.8 million, higher software license fees of $0.9 million and higher FDIC insurance expense of $1.7 million.

The effective tax rate for the first quarter of 2023 was 25.38% compared with 22.40% in the previous quarter and 22.15% during the same quarter of 2022. The increase in the effective tax rate on a linked quarter basis was due to a non-recurring benefit from the leveraged lease terminations received in the fourth quarter and an unfavorable discrete tax item in the first quarter. The year over year increase was primarily due to lower benefits from tax credit investments. The effective tax rate in the first quarter of 2022 also included benefits from leveraged leases that have since been terminated.

Asset Quality

The Company's overall asset quality remained strong during the first quarter of 2023. Provision for credit losses for the first quarter of 2023 was $2.0 million compared with $0.2 million in the previous quarter and a net benefit of $5.5 million in the same quarter of 2022.

Total non-performing assets were $12.1 million at March 31, 2023, down $0.5 million from December 31, 2022 and down $7.9 million from March 31, 2022. Non-performing assets as a percentage of total loans and leases and foreclosed real estate were 0.09% at the end of the quarter, flat from the end of the prior quarter and a decrease of 7 basis points from the same quarter of 2022.

Net loan and lease charge-offs during the first quarter of 2023 were $2.7 million or 0.08% annualized of total average loans and leases outstanding. Net loan and lease charge-offs for the first quarter of 2023 were comprised of charge-offs of $4.3 million partially offset by recoveries of $1.6 million. Compared to the prior quarter, net loan and lease charge-offs increased by $0.8 million or 3 basis points annualized on total average loans and leases outstanding. Compared to the same quarter of 2022, net loan and lease charge-offs increased by $1.2 million or 3 basis points annualized on total average loans and leases outstanding.

The allowance for credit losses on loans and leases was $143.6 million at March 31, 2023, a decrease of $0.9 million from December 31, 2022 and a decrease of $8.5 million from March 31, 2022. The ratio of the allowance for credit losses to total loans and leases outstanding was 1.04% at the end of the quarter, down 2 basis points from the end of the prior quarter and down 17 basis points from the end of the same quarter of 2022.

Balance Sheet

Total assets were $23.9 billion at March 31, 2023, an increase of 1.4% from December 31, 2022 and an increase of 4.1% from March 31, 2022, primarily due to growth in our earning assets.

The investment securities portfolio was $8.1 billion at March 31, 2023, a decrease of 1.6% from December 31, 2022 and a decrease of 7.1% from March 31, 2022. These decreases were due to cashflows from the portfolio exceeding the pace of reinvestment. Period end unrealized losses on securities decreased by $120.7 million from the prior quarter end. The investment portfolio remains largely comprised of securities issued by U.S. government agencies and U.S. government-sponsored enterprises.

Total loans and leases were $13.8 billion at March 31, 2023, an increase of 1.3% from December 31, 2022 and an increase of 10.2% from March 31, 2022. Total commercial loans were $5.6 billion at March 31, 2023, an increase of 1.9% from the prior quarter and an increase of 10.9% from the same quarter of 2022, primarily due to an increase in our commercial mortgage portfolio. Total consumer loans were $8.3 billion as of March 31, 2023, an increase of 0.9% from the prior quarter and 9.7% from the same period in 2022, primarily driven by increases in our residential mortgage and home equity portfolios.

Total deposits were $20.5 billion at March 31, 2023, a decrease of 0.6% from December 31, 2022 and a decrease of 1.1% from March 31, 2022. Noninterest bearing deposits made up 31% of total deposit balances as of March 31, 2023, down from 33% as of December 31, 2022 and 36% as of March 31, 2022. Average deposits were $20.4 billion for the first quarter of 2023, up 0.4% from $20.3 billion in the prior quarter, and essentially unchanged from the first quarter of 2022. As of March 31, 2023 insured and collateralized deposits represent 58% of total deposit balances, up from 57% as of December 31, 2022 and 56% as of March 31, 2022.

Capital and Dividends

The Company's capital levels remain well within regulatory well-capitalized guidelines.

The Tier 1 Capital Ratio was 12.10% at March 31, 2023 compared with 12.15% at December 31, 2022 and 13.22% at March 31, 2022. The Tier 1 Leverage Ratio was 7.19% at March 31, 2023 compared with 7.37% at December 31, 2022 and 7.30% at March 31, 2022. The decline in the Tier 1 Capital Ratio was due to an increase in risk-weighted assets and the decline in the Tier 1 Leverage Ratio was due to an increase in average total assets, both as a result of loan growth over the period.

The Company repurchased 150.0 thousand shares of common stock at a total cost of $9.9 million under its share repurchase program in the first quarter of 2023. Total remaining buyback authority under the share repurchase program was $126.0 million at March 31, 2023.

The Company's Board of Directors declared a quarterly cash dividend of $0.70 per share on the Company's outstanding common shares. The dividend will be payable on June 14, 2023 to shareholders of record at the close of business on May 31, 2023.

On April 4, 2023, the Board of Directors declared the quarterly dividend payment of $10.94 per share, equivalent to $0.2735 per depositary share, on its preferred stock. The depositary shares representing the Series A Preferred Stock are traded on the NYSE under the symbol "BOH.PRA." The dividend will be payable on May 1, 2023 to shareholders of record of the preferred stock as of April 14, 2023.

Conference Call Information

The Company will review its first quarter financial results today at 8:00 a.m. Hawaii Time (2:00 p.m. Eastern Time). The live call, including a slide presentation, will be accessible on the investor relations link of Bank of Hawai‘i Corporation's website, www.boh.com. The webcast can be accessed via the link below: https://register.vevent.com/register/BIf628c91a80f642cb96f2725eff121a04. A replay of the conference call will be available for one year beginning approximately 11:00 a.m. Hawaii Time on Monday, April 24, 2023. The replay will be accessible via the same link. In addition, the replay will be available on the Company's website, www.boh.com.

Forward-Looking Statements

This news release, and other statements made by the Company in connection with it may contain "forward-looking statements" (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties that could cause results to be materially different from expectations. Forecasts of our financial results and condition, expectations for our operations and business prospects, and our assumptions used in those forecasts and expectations are examples of certain of these forward-looking statements. Do not unduly rely on forward-looking statements. Actual results might differ significantly from our forecasts and expectations because of a variety of factors. More information about these factors is contained in Bank of Hawai‘i Corporation's Annual Report on Form 10-K for the year ended December 31, 2022 which was filed with the U.S. Securities and Exchange Commission. These forward-looking statements are not guarantees of future performance and speak only as of the date made, and, except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances.

Bank of Hawai‘i Corporation is an independent regional financial services company serving businesses, consumers, and governments in Hawaii and the West Pacific. The Company's principal subsidiary, Bank of Hawai‘i, was founded in 1897. For more information about Bank of Hawai‘i Corporation, see the Company's web site, www.boh.com. Bank of Hawai‘i Corporation is a trade name of Bank of Hawaii Corporation.

Bank of Hawai‘i Corporation and Subsidiaries
Financial Highlights							Table 1
	Three Months Ended
	March 31,			December 31,			March 31,
(dollars in thousands, except per share amounts)	2023			2022			2022
For the Period:
Operating Results
Net Interest Income	$	135,955		$	140,738		$	125,263
Provision for Credit Losses		2,000			200			(5,500	)
Total Noninterest Income		40,737			41,172			43,551
Total Noninterest Expense		111,919			102,703			103,874
Pre-Provision Net Revenue		64,773			79,207			64,940
Net Income		46,842			61,307			54,834
Net Income Available to Common Shareholders		44,873			59,338			52,865
Basic Earnings Per Common Share		1.14			1.51			1.33
Diluted Earnings Per Common Share		1.14			1.50			1.32
Dividends Declared Per Common Share		0.70			0.70			0.70

Performance Ratios
Return on Average Assets		0.80	%		1.05	%		0.97	%
Return on Average Shareholders' Equity		14.25			18.91			14.18
Return on Average Common Equity		15.79			21.28			15.44
Efficiency Ratio ¹		63.34			56.46			61.53
Net Interest Margin ²		2.47			2.60			2.34
Dividend Payout Ratio ³		61.40			46.36			52.63
Average Shareholders' Equity to Average Assets		5.59			5.56			6.87

Average Balances
Average Loans and Leases	$	13,717,483		$	13,452,791		$	12,290,402
Average Assets		23,865,478			23,147,398			22,847,488
Average Deposits		20,430,882			20,341,327			20,426,076
Average Shareholders' Equity		1,332,889			1,286,291			1,568,725

Per Share of Common Stock
Book Value	$	29.62		$	28.54		$	31.50
Tangible Book Value		28.83			27.75			30.71
Market Value
Closing		52.08			77.56			83.92
High		81.73			82.87			92.38
Low		34.71			70.15			79.60

	March 31,			December 31,			March 31,
	2023			2022			2022
As of Period End:
Balance Sheet Totals
Loans and Leases	$	13,824,522		$	13,646,420		$	12,544,492
Total Assets		23,931,977			23,606,877			23,000,317
Total Deposits		20,491,300			20,615,696			20,716,287
Other Debt		510,269			410,294			10,367
Total Shareholders' Equity		1,354,430			1,316,995			1,448,885

Asset Quality
Non-Performing Assets	$	12,124		$	12,647		$	19,979
Allowance for Credit Losses - Loans and Leases		143,577			144,439			152,028
Allowance to Loans and Leases Outstanding ⁴		1.04	%		1.06	%		1.21	%

Capital Ratios ⁵
Common Equity Tier 1 Capital Ratio		10.88	%		10.92	%		11.83	%
Tier 1 Capital Ratio		12.10			12.15			13.22
Total Capital Ratio		13.13			13.17			14.41
Tier 1 Leverage Ratio		7.19			7.37			7.30
Total Shareholders' Equity to Total Assets		5.66			5.58			6.30
Tangible Common Equity to Tangible Assets ⁶		4.78			4.69			5.39
Tangible Common Equity to Risk-Weighted Assets ⁶		7.97			7.76			9.77

Non-Financial Data
Full-Time Equivalent Employees		2,025			2,076			2,084
Branches		51			51			54
ATMs		320			320			307

¹		Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and total noninterest income).
²		Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets.
³		Dividend payout ratio is defined as dividends declared per common share divided by basic earnings per common share.
⁴		The numerator comprises the Allowance for Credit Losses - Loans and Leases.
⁵		Regulatory capital ratios as of March 31, 2023 are preliminary.
⁶		Tangible common equity to tangible assets and tangible common equity to risk-weighted assets are Non-GAAP financial measures.
		Tangible common equity is defined by the Company as common shareholders' equity minus goodwill.
		See Table 2 "Reconciliation of Non-GAAP Financial Measures".

Bank of Hawai‘i Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures							Table 2
	March 31,			December 31,			March 31,
(dollars in thousands)	2023			2022			2022

Total Shareholders' Equity	$	1,354,430		$	1,316,995		$	1,448,885
Less: Preferred Stock		180,000			180,000			180,000
Goodwill		31,517			31,517			31,517
Tangible Common Equity	$	1,142,913		$	1,105,478		$	1,237,368

Total Assets		23,931,977			23,606,877			23,000,317
Less: Goodwill		31,517			31,517			31,517
Tangible Assets	$	23,900,460		$	23,575,360		$	22,968,800

Risk-Weighted Assets, determined in accordance
with prescribed regulatory requirements ¹	$	14,341,397		$	14,238,798		$	12,663,646

Total Shareholders' Equity to Total Assets		5.66	%		5.58	%		6.30	%
Tangible Common Equity to Tangible Assets (Non-GAAP)		4.78	%		4.69	%		5.39	%

Tier 1 Capital Ratio ¹		12.10	%		12.15	%		13.22	%
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) ¹		7.97	%		7.76	%		9.77	%

Regulatory capital ratios as of March 31, 2023 are preliminary.

Bank of Hawai‘i Corporation and Subsidiaries
Consolidated Statements of Income							Table 3
	Three Months Ended
	March 31,			December 31,			March 31,
(dollars in thousands, except per share amounts)	2023			2022			2022
Interest Income
Interest and Fees on Loans and Leases	$	136,501		$	128,683		$	94,439
Income on Investment Securities
Available-for-Sale		23,893			18,476			17,100
Held-to-Maturity		23,948			23,708			18,701
Deposits		27			13			4
Funds Sold		3,366			1,093			127
Other		597			340			202
Total Interest Income		188,332			172,313			130,573
Interest Expense
Deposits		37,794			23,494			2,353
Securities Sold Under Agreements to Repurchase		5,377			4,289			2,772
Funds Purchased		704			318			2
Short-Term Borrowings		3,203			1,978			-
Other Debt		5,299			1,496			183
Total Interest Expense		52,377			31,575			5,310
Net Interest Income		135,955			140,738			125,263
Provision for Credit Losses		2,000			200			(5,500	)
Net Interest Income After Provision for Credit Losses		133,955			140,538			130,763
Noninterest Income
Trust and Asset Management		10,690			10,652			11,276
Mortgage Banking		1,004			991			2,740
Service Charges on Deposit Accounts		7,737			7,513			7,272
Fees, Exchange, and Other Service Charges		13,808			13,906			12,952
Investment Securities Losses, Net		(1,792	)		(1,124	)		(1,545	)
Annuity and Insurance		1,271			1,087			791
Bank-Owned Life Insurance		2,842			2,475			2,349
Other		5,177			5,672			7,716
Total Noninterest Income		40,737			41,172			43,551
Noninterest Expense
Salaries and Benefits		65,088			57,639			59,924
Net Occupancy		9,872			9,499			9,826
Net Equipment		10,375			9,942			9,153
Data Processing		4,583			4,579			4,560
Professional Fees		3,883			3,958			3,258
FDIC Insurance		3,234			1,774			1,502
Other		14,884			15,312			15,651
Total Noninterest Expense		111,919			102,703			103,874
Income Before Provision for Income Taxes		62,773			79,007			70,440
Provision for Income Taxes		15,931			17,700			15,606
Net Income	$	46,842		$	61,307		$	54,834
Preferred Stock Dividends		1,969			1,969			1,969
Net Income Available to Common Shareholders	$	44,873		$	59,338		$	52,865
Basic Earnings Per Common Share	$	1.14		$	1.51		$	1.33
Diluted Earnings Per Common Share	$	1.14		$	1.50		$	1.32
Dividends Declared Per Common Share	$	0.70		$	0.70		$	0.70
Basic Weighted Average Common Shares		39,276,833			39,395,338			39,752,679
Diluted Weighted Average Common Shares		39,465,889			39,618,896			39,956,391

Bank of Hawai‘i Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)					Table 4
	Three Months Ended
	March 31,		December 31,		March 31,
(dollars in thousands)	2023		2022		2022
Net Income	$	46,842	$	61,307	$	54,834
Other Comprehensive Income (Loss), Net of Tax:
Net Unrealized Gains (Losses) on Investment Securities		29,276		5,677		(180,124	)
Defined Benefit Plans		84		7,359		353
Other Comprehensive Income (Loss)		29,360		13,036		(179,771	)
Comprehensive Income (Loss)	$	76,202	$	74,343	$	(124,937	)

Bank of Hawai‘i Corporation and Subsidiaries
Consolidated Statements of Condition							Table 5
	March 31,			December 31,			March 31,
(dollars in thousands)	2023			2022			2022
Assets
Interest-Bearing Deposits in Other Banks	$	2,554		$	3,724		$	2,488
Funds Sold		272,018			81,364			356,373
Investment Securities
Available-for-Sale		2,815,083			2,844,823			4,258,534
Held-to-Maturity (Fair Value of $4,601,876; $4,615,393; and $4,171,262)		5,312,815			5,414,139			4,489,615
Loans Held for Sale		2,149			1,035			5,293
Loans and Leases		13,824,522			13,646,420			12,544,492
Allowance for Credit Losses		(143,577	)		(144,439	)		(152,028	)
Net Loans and Leases		13,680,945			13,501,981			12,392,464
Total Earning Assets		22,085,564			21,847,066			21,504,767
Cash and Due from Banks		337,413			316,679			236,193
Premises and Equipment, Net		203,131			206,777			199,743
Operating Lease Right-of-Use Assets		91,387			92,307			93,563
Accrued Interest Receivable		63,175			61,002			45,392
Foreclosed Real Estate		1,040			1,040			2,332
Mortgage Servicing Rights		22,102			22,619			23,968
Goodwill		31,517			31,517			31,517
Bank-Owned Life Insurance		455,602			453,882			446,926
Other Assets		641,046			573,988			415,916
Total Assets	$	23,931,977		$	23,606,877		$	23,000,317

Liabilities
Deposits
Noninterest-Bearing Demand	$	6,385,872		$	6,714,982		$	7,500,741
Interest-Bearing Demand		4,283,801			4,232,567			4,591,178
Savings		7,898,874			7,962,410			7,701,849
Time		1,922,753			1,705,737			922,519
Total Deposits		20,491,300			20,615,696			20,716,287
Short-Term Borrowings		325,000			-			-
Securities Sold Under Agreements to Repurchase		725,490			725,490			450,490
Other Debt		510,269			410,294			10,367
Operating Lease Liabilities		99,746			100,526			101,274
Retirement Benefits Payable		26,768			26,991			38,008
Accrued Interest Payable		13,061			9,698			2,545
Taxes Payable		11,039			7,104			17,265
Other Liabilities		374,874			394,083			215,196
Total Liabilities		22,577,547			22,289,882			21,551,432
Shareholders' Equity
Preferred Stock ($.01 par value; authorized 180,000 shares;

Bank of Hawai'i Corporation First Quarter 2023 Financial Results