Diluted Earnings Per Common Share $0.81
Net Income $34.1 Million
Net Interest Margin 2.15%
Board of Directors Declares Dividend of $0.70 Per Common Share
Industry-wide FDIC Special Assessment Resulted in a $2.6 Million Non-Recurring Charge in the Second Quarter of 2024
Raised $165 million in connection with preferred stock offering in late June

Bank of Hawai‘i Corporation (NYSE:BOH) today reported diluted earnings per common share of $0.81 for the second quarter of 2024, compared with diluted earnings per common share of $0.87 in the previous quarter and $1.12 in the same quarter of 2023. An industry-wide FDIC Special Assessment resulted in a $2.6 million one-time charge in the second quarter of 2024 which negatively impacted diluted earnings per common share by $0.05. Net income for the second quarter of 2024 was $34.1 million, down 6.3% from the previous quarter and down 26.0% from the same quarter of 2023. The return on average common equity for the second quarter of 2024 was 10.41% compared with 11.20% in the previous quarter and 14.95% in the same quarter of 2023.

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"Bank of Hawai‘i delivered strong financial results in the second quarter of 2024," said Peter Ho, Chairman and CEO. "Credit quality remained exceptional with non-performing assets of 0.11% at quarter end and net charge-offs of 0.10% during the quarter. Our net interest margin increased by 4 basis points as we continued to benefit from cashflows repricing. Our core noninterest income remained steady while core noninterest expense increased by 2.0%. Average deposits were down by 0.9% and average loans were down modestly. Finally, we successfully closed a preferred stock offering in late June, strengthening our already strong capital levels."

Financial Highlights

Net interest income for the second quarter of 2024 was $114.8 million, an increase of 0.8% from the previous quarter and a decrease of 7.6% from the same quarter of 2023. Net interest margin was 2.15% in the second quarter of 2024, an increase of 4 basis points from the previous quarter and a decrease of 7 basis points from the same quarter of 2023. The increases from the prior quarter were primarily due to higher earning asset yields, partially offset by higher funding costs. The decreases from the same period in 2023 were primarily due to higher funding costs, partially offset by higher earning asset yields.

The average yield on loans and leases was 4.76% in the second quarter of 2024, up 13 basis points from the prior quarter and up 57 basis points from the same quarter of 2023. The average yield on total earning assets was 3.99% in the second quarter of 2024, up 10 basis points from the prior quarter and up 43 basis points from the same quarter of 2023. The average cost of interest-bearing deposits was 2.46% in the second quarter of 2024, up 7 basis points from the prior quarter and up 92 basis points from the same quarter of 2023. The average cost of total deposits, including noninterest-bearing deposits, was 1.81%, up 7 basis points from the prior quarter and up 73 basis points from the same quarter of 2023. The changes in yields and rates over the linked quarter and year over year period reflected deposit mix shift and repricing.

Noninterest income was $42.1 million in the second quarter of 2024, a decrease of 0.5% from the previous quarter and a decrease of 2.7% from the same period in 2023. Noninterest income in the second quarter of 2023 included $1.5 million from the sale of a low-income housing tax credit investment. Adjusted for this item, noninterest income increased by 0.9% from adjusted noninterest income in the same period in 2023.

Noninterest expense was $109.2 million in the second quarter of 2024, an increase of 3.2% from the previous quarter and an increase of 5.0% from the same quarter of 2023. As discussed above, noninterest expense in the second quarter of 2024 included an industry-wide FDIC Special Assessment of $2.6 million, as well as separation expenses of $0.8 million, while noninterest expense in the first quarter of 2024 included seasonal payroll expenses of approximately $2.2 million and separation expenses of $0.5 million. Adjusted noninterest expense in the second quarter of 2024 was $105.9 million, up 2.6% from adjusted noninterest expense in the previous quarter and up 1.8% from the same period in 2023.

The effective tax rate for the second quarter of 2024 was 24.77% compared with 24.76% in the previous quarter and 24.57% during the same quarter of 2023.

Asset Quality

The Company's overall asset quality remained strong during the second quarter of 2024. Provision for credit losses for the second quarter of 2024 was $2.4 million compared with $2.0 million in the previous quarter and $2.5 million in the same quarter of 2023.

Total non-performing assets were $15.2 million at June 30, 2024, up $3.3 million from March 31, 2024 and up $3.7 million from June 30, 2023. Non-performing assets as a percentage of total loans and leases and foreclosed real estate were 0.11% at the end of the quarter, an increase of 2 basis points from the end of the prior quarter and an increase of 3 basis points from the same quarter of 2023.

Net loan and lease charge-offs during the second quarter of 2024 were $3.4 million or 10 basis points annualized of total average loans and leases outstanding. Net loan and lease charge-offs for the second quarter of 2024 were comprised of charge-offs of $4.8 million partially offset by recoveries of $1.4 million. Compared to the prior quarter, net loan and lease charge-offs increased by $1.1 million or 3 basis points annualized on total average loans and leases outstanding. Compared to the same quarter of 2023, net loan and lease charge-offs increased by $2.0 million or 6 basis points annualized on total average loans and leases outstanding.

The allowance for credit losses on loans and leases was $147.5 million at June 30, 2024, a decrease of $0.2 million from March 31, 2024 and an increase of $2.1 million from June 30, 2023. The ratio of the allowance for credit losses to total loans and leases outstanding was 1.07% at the end of the quarter, flat from the end of the prior quarter and up 3 basis points from the same quarter of 2023.

Balance Sheet

Total assets were $23.3 billion at June 30, 2024, a decrease of 0.5% from March 31, 2024 and a decrease of 6.6% from June 30, 2023. The decrease from the prior quarter was primarily due to decreases in investment securities and funds sold partially offset by an increase in cash and due from banks. The decrease from the same period in 2023 was primarily due to decreases in our investment securities and funds sold.

The investment securities portfolio was $7.1 billion at June 30, 2024, a decrease of 2.1% from March 31, 2024 and a decrease of 9.6% from June 30, 2023. This linked quarter decrease was primarily due to cashflows from the portfolio not being reinvested into securities. The decrease from the same quarter of 2023 was due to the sale of $159.1 million of investment securities in the third quarter of 2023, as well as cashflows from the portfolio not being reinvested into securities. 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 June 30, 2024, a decrease of 0.2% from March 31, 2024 and a decrease of 0.6% from June 30, 2023. Total commercial loans were $5.8 billion at June 30, 2024, an increase of 0.7% from the prior quarter and an increase of 3.6% from the same quarter of 2023. The increase from the prior quarter was primarily due to increases in commercial mortgage and commercial and industrial portfolios. The increase from the same period in 2023 was primarily due to increases in our commercial and industrial and construction portfolios, partially offset by a decrease in commercial mortgage. Total consumer loans were $8.0 billion at June 30, 2024, a decrease of 0.8% from the prior quarter and a decrease of 3.5% from the same period in 2023. The decreases were primarily due to decreases in our residential mortgage, home equity and automobile portfolios.

Total deposits were $20.4 billion at June 30, 2024, a decrease of 1.3% from March 31, 2024 and a decrease of 0.5% from June 30, 2023. Noninterest-bearing deposits made up 26% of total deposit balances at June 30, 2024, down from 27% at March 31, 2024 and down from 29% at June 30, 2023. Average total deposits were $20.4 billion for the second quarter of 2024, down 0.9% from $20.5 billion in the prior quarter and up 1.7% from $20.0 billion in the second quarter of 2023. Insured and uninsured but collateralized deposits represented 59% of total deposit balances at June 30, 2024, up from 58% at March 31, 2024 and down from 61% at June 30, 2023. At the end of the quarter, our readily available liquidity of $10.0 billion exceeded total uninsured and uncollateralized deposits.

Capital and Dividends

The Company's capital levels increased quarter over quarter and remain well above regulatory well-capitalized minimums.

In the second quarter of 2024, the Company issued $165 million of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B, at a rate of 8.000%. The Company received net proceeds from the offering of $160.6 million after issuance cost.

The Tier 1 Capital Ratio was 13.99% at June 30, 2024 compared with 12.74% at March 31, 2024 and 12.21% at June 30, 2023. The Tier 1 Leverage Ratio was 8.37% at June 30, 2024, up 75 basis points from 7.62% at March 31, 2024 and up 116 basis points from 7.21% at June 30, 2023. The increases were primarily due to higher Tier 1 capital as a result of the Series B Preferred Stock offering, discussed above, retained earnings growth and decreases in risk-weighted assets and average total assets.

No shares of common stock were repurchased under the share repurchase program in the second quarter of 2024. Total remaining buyback authority under the share repurchase program was $126.0 million at June 30, 2024.

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 September 16, 2024 to shareholders of record at the close of business on August 30, 2024.

On July 8, 2024, the Company announced that the Board of Directors declared a quarterly dividend payment of $10.94 per share, equivalent to $0.2735 per depositary share, of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A, and a quarterly dividend payment of $8.89 per share, equivalent to $0.2223 per depositary share, of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B. The depositary shares representing the Series A Preferred Stock and Series B Preferred Stock are traded on the NYSE under the symbol "BOH.PRA" and "BOH.PRB", respectively. The dividends on the Series A Preferred Stock and Series B Preferred Stock will be payable on August 1, 2024 to shareholders of record of the preferred stock as of the close of business on July 18, 2024.

Conference Call Information

The Company will review its second quarter financial results today at 8:00 a.m. Hawai‘i Time (2:00 p.m. Eastern Time). The 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: https://register.vevent.com/register/BI199e7796d16b4ac8844dd7c346201625. A replay of the conference call will be available for one year beginning approximately 11:00 a.m. Hawai‘i Time on Monday, July 22, 2024. The replay will be available on the Company's website, www.boh.com.

Investor Announcements

Investors and others should note that the Company intends to announce financial and other information to the Company's investors using the Company's investor relations website at https://ir.boh.com, social media channels, press releases, SEC filings and public conference calls and webcasts, all for purposes of complying with the Company's disclosure obligations under Regulation FD. Accordingly, investors should monitor these channels, as information is updated, and new information is posted.

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, 2023 and its Form 10-Q for fiscal quarter ended March 31, 2024, which were 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 Hawai‘i 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 website, 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									Six Months Ended
	June 30,			March 31,			June 30,			June 30,
(dollars in thousands, except per share amounts)		2024			2024			2023			2024			2023
For the Period:
Operating Results
Net Interest Income	$	114,846		$	113,938		$	124,348		$	228,784		$	260,303
Provision for Credit Losses		2,400			2,000			2,500			4,400			4,500
Total Noninterest Income		42,087			42,285			43,255			84,372			83,992
Total Noninterest Expense		109,226			105,859			104,036			215,085			215,955
Pre-Provision Net Revenue		47,707			50,364			63,567			98,071			128,340
Net Income		34,083			36,391			46,061			70,474			92,903
Net Income Available to Common Shareholders ¹		32,114			34,422			44,092			66,536			88,965
Basic Earnings Per Common Share		0.81			0.87			1.12			1.69			2.27
Diluted Earnings Per Common Share		0.81			0.87			1.12			1.68			2.26
Dividends Declared Per Common Share		0.70			0.70			0.70			1.40			1.40

Performance Ratios
Return on Average Assets		0.59	%		0.63	%		0.77	%		0.61	%		0.78	%
Return on Average Shareholders' Equity		9.53			10.34			13.55			9.93			13.90
Return on Average Common Equity		10.41			11.20			14.95			10.81			15.36
Efficiency Ratio ²		69.60			67.76			62.07			68.68			62.72
Net Interest Margin ³		2.15			2.11			2.22			2.13			2.34
Dividend Payout Ratio ⁴		86.42			80.46			62.50			82.84			61.67
Average Shareholders' Equity to Average Assets		6.22			6.08			5.65			6.15			5.62

Average Balances
Average Loans and Leases	$	13,831,797		$	13,868,800		$	13,876,754		$	13,850,299		$	13,797,559
Average Assets		23,145,107			23,281,566			24,114,443			23,213,336			23,990,649
Average Deposits		20,358,393			20,543,640			20,018,601			20,451,017			20,223,603
Average Shareholders' Equity		1,438,476			1,416,102			1,363,059			1,427,289			1,348,057

Per Share of Common Stock
Book Value	$	31.91		$	31.62		$	29.66		$	31.91		$	29.66
Tangible Book Value		31.12			30.83			28.87			31.12			28.87
Market Value
Closing		57.21			62.39			41.23			57.21			41.23
High		62.53			73.73			52.37			73.73			81.73
Low		54.50			58.38			30.83			54.50			30.83

				June 30,			March 31,			December 31,			June 30,
					2024			2024			2023			2023
As of Period End:
Balance Sheet Totals
Loans and Leases				$	13,831,266		$	13,853,837		$	13,965,026		$	13,914,889
Total Assets					23,300,768			23,420,860			23,733,296			24,947,936
Total Deposits					20,408,502			20,676,586			21,055,045			20,508,615
Other Debt					560,136			560,163			560,190			1,760,243
Total Shareholders' Equity					1,612,849			1,435,977			1,414,242			1,358,279

Asset Quality
Non-Performing Assets				$	15,179		$	11,838		$	11,747		$	11,477
Allowance for Credit Losses - Loans and Leases					147,477			147,664			146,403			145,367
Allowance to Loans and Leases Outstanding ⁵					1.07	%		1.07	%		1.05	%		1.04	%

Capital Ratios ⁶
Common Equity Tier 1 Capital Ratio					11.59	%		11.50	%		11.33	%		11.00	%
Tier 1 Capital Ratio					13.99			12.74			12.56			12.21
Total Capital Ratio					15.05			13.81			13.60			13.24
Tier 1 Leverage Ratio					8.37			7.62			7.51			7.21
Total Shareholders' Equity to Total Assets					6.92			6.13			5.96			5.44
Tangible Common Equity to Tangible Assets ⁷					5.31			5.24			5.07			4.60
Tangible Common Equity to Risk-Weighted Assets ⁷					8.82			8.70			8.45			7.97

Non-Financial Data
Full-Time Equivalent Employees					1,910			1,891			1,899			2,025
Branches					50			50			51			51
ATMs					317			315			318			320

¹ Due to rounding, the amounts presented in this table may not tie to other amounts presented elsewhere in this report.
² Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and total noninterest income).
³ Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets.
⁴ Dividend payout ratio is defined as dividends declared per common share divided by basic earnings per common share.
⁵ The numerator comprises the Allowance for Credit Losses - Loans and Leases.
⁶ Regulatory capital ratios as of June 30, 2024 are preliminary.

Bank of Hawai'i Corporation Second Quarter 2024 Financial Results