Bank of Hawai'i Corporation Fourth Quarter and Full Year 2024 Financial Results

• Diluted Earnings Per Common Share of $3.46 and $0.85 for the Year and Quarter Ended December 31, 2024, Respectively
• Net Income of $150.0 Million and $39.2 Million for the Year and Quarter Ended December 31, 2024, Respectively
• Total Assets $23.6 Billion and Total Deposits $20.6 Billion at Year End
• Net Interest Margin 2.19% for the Fourth Quarter of 2024
• Board of Directors Declares Dividend of $0.70 Per Common Share

Bank of Hawai‘i Corporation (NYSE:BOH) (the "Company") today reported diluted earnings per common share of $3.46 for the full year of 2024, compared with $4.14 for the full year of 2023. Net income for the year was $150.0 million, down 12.4% from the previous year. The return on average common equity for the full year of 2024 was 10.85% compared with 13.89% in 2023.

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"Bank of Hawai‘i finished 2024 with strong financial performance," said Peter Ho, Chairman and CEO. "In the fourth quarter, our net interest income and net interest margin continued their upward trajectories and average loan balances and average deposit balances grew. During 2024, we strengthened capital levels, controlled core expenses and maintained excellent credit quality."

Diluted earnings per common share was $0.85 for the fourth quarter of 2024, compared with $0.93 during the linked quarter and $0.72 during the same period last year. Net income for the fourth quarter of 2024 was $39.2 million, down 3.0% from the linked quarter and up 28.8% from the same period last year. The return on average common equity for the fourth quarter of 2024 was 10.30% compared with 11.50% during the linked quarter and 9.55% during the same period last year.

Financial Highlights

Net interest income for the fourth quarter of 2024 was $120.2 million, an increase of 2.2% from the linked quarter and an increase of 3.8% as compared to the same period last year. The increase from the previous quarter was primarily due to higher average balance of our earning assets, slowing of deposit mix shift and repricing and lower funding costs, partially offset by lower earning asset yields. The increase from the same period last year was primarily due to higher earning asset yields and higher average balance of our earning assets, partially offset by higher average balance of interest-bearing deposits.

Net interest margin was 2.19% in the fourth quarter of 2024, an increase of 1 basis point from the linked quarter and an increase of 6 basis points from the same period last year. The increase from the linked quarter was primarily due to lower interest-bearing deposits rates, partially offset by lower earning asset yields. The increase from the same period last year was primarily due to higher earning asset yields, partially offset by higher interest-bearing deposit rates.

The average yield on loans and leases was 4.73% in the fourth quarter of 2024, down 9 basis points from the linked quarter and up 19 basis points from the same period last year. The average yield on total earning assets was 3.97% in the fourth quarter of 2024, down 9 basis points from the linked quarter and up 12 basis points from the same period last year. The average cost of interest-bearing deposits was 2.37% in the fourth quarter of 2024, down 15 basis points from the linked quarter and up 7 basis points from the same period last year. The average quarterly cost of total deposits, including noninterest-bearing deposits, was 1.77%, down 10 basis points from the linked quarter and up 10 basis points from the same period last year. The changes in yields and rates over the linked quarter reflected the lower rate environment, including lower benchmark interest rates. The changes in yields and rates year over year period reflected repricing of our loans and an elevated deposit mix shift during the period.

Noninterest income was $43.0 million in the fourth quarter of 2024, a decrease of 4.6% from the linked quarter and an increase of 1.8% from the same period in 2023. Noninterest income in the fourth quarter of 2024 included a $2.4 million charge incurred in connection with a change in our Visa Class B conversion ratio. Adjusted for this item, noninterest income would have been $45.4 million, an increase of 0.7% from the linked quarter and an increase of 7.5% from the same period in 2023. The increase from the same period last year was primarily due to increases in trust and asset management income, service charges on deposits accounts, and fees, exchange, and other service charges.

Noninterest expense was $107.9 million in the fourth quarter of 2024, an increase of 0.8% from the linked quarter and a decrease of 6.9% from the same period last year. Noninterest expense in the fourth quarter of 2023 included an industry-wide FDIC Special Assessment of $14.7 million and $1.7 million of expense savings that were not expected to recur in 2024. Adjusted for these items, noninterest expense in the fourth quarter of 2024 increased by 4.9% from adjusted noninterest expense in the same period last year. The increase was primarily due to higher medical cost in the fourth quarter of 2024 that are not expected to repeat.

The effective tax rate for the fourth quarter of 2024 was 24.02% compared with 23.33% during the linked quarter and 23.25% during the same period last year.

Asset Quality

The Company's overall asset quality remained strong during the fourth quarter of 2024. Provision for credit losses for the fourth quarter of 2024 was $3.8 million compared with $3.0 million in the linked quarter and $2.5 million in the same period last year.

Total non-performing assets were $19.3 million at December 31, 2024, down $0.5 million from September 30, 2024 and up $7.6 million from December 31, 2023. Non-performing assets as a percentage of total loans and leases and foreclosed real estate were 0.14% at the end of the quarter, flat from the linked quarter and an increase of 5 basis points from the same period last year.

Net loan and lease charge-offs during the fourth quarter of 2024 were $3.4 million or 10 basis points annualized of total average loans and leases outstanding and comprised of gross charge-offs of $5.2 million partially offset by gross recoveries of $1.8 million. Compared to the linked quarter, net loan and lease charge-offs decreased by $0.4 million or 1 basis point annualized on total average loans and leases outstanding. Compared to the same period last year, net loan and lease charge-offs increased by $1.7 million or 5 basis points annualized on total average loans and leases outstanding.

The allowance for credit losses on loans and leases was $148.5 million at December 31, 2024, an increase of $1.2 million from September 30, 2024 and an increase of $2.1 million from December 31, 2023. The ratio of the allowance for credit losses to total loans and leases outstanding was 1.06% at the end of the quarter, flat from the linked quarter and up 1 basis point from the same period last year.

Balance Sheet

Total assets were $23.6 billion at December 31, 2024, a decrease of 0.8% from September 30, 2024 and a decrease of 0.6% from December 31, 2023. The decrease from the prior periods was primarily due to a decrease in cash and cash equivalents.

The investment securities portfolio was $7.3 billion at December 31, 2024, an increase of 0.7% from September 30, 2024 and a decrease of 1.3% from December 31, 2023. This linked quarter increase was primarily due to the purchases of investment securities in the fourth quarter partially offset by cashflows from the portfolio. The decrease from the same period last year was primarily due to cashflows from the portfolio not being reinvested into securities, partially offset by purchases of investment securities in the third and fourth quarters of 2024. The majority of investment purchases during 2024 were in floating rate 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 $14.1 billion at December 31, 2024, an increase of 1.1% from September 30, 2024 and an increase of 0.8% from December 31, 2023. Total commercial loans were $6.1 billion at December 31, 2024, an increase of 3.3% from September 30, 2024 and an increase of 6.0% from December 31, 2023. The increase from the previous periods was primarily due to loan production within our commercial mortgage portfolio. Total consumer loans were $8.0 billion at December 31, 2024, a decrease of 0.5% from the linked quarter and a decrease of 2.9% from the same period last year. The decrease from the linked quarter was primarily due to declines in our home equity and automobile portfolios. The decrease from the same period last year was primarily due to declines in our residential mortgage, home equity and automobile portfolios.

Total deposits were $20.6 billion at December 31, 2024, a decrease of 1.6% from September 30, 2024 and a decrease of 2.0% from December 31, 2023. Noninterest-bearing deposits made up 26.3% of total deposit balances at December 31, 2024, up from 25.8% at September 30, 2024 and down from 28.8% at December 31, 2023. Average total deposits were $20.8 billion for the fourth quarter of 2024, up 1.3% from $20.5 billion in the linked quarter and up 0.3% from $20.7 billion in the same period last year.

Capital and Dividends

The Company's capital levels remain well above regulatory well-capitalized minimums.

The Tier 1 Capital Ratio was 13.95% at December 31, 2024 compared with 14.05% at September 30, 2024 and 12.56% at December 31, 2023. The Tier 1 Leverage Ratio was 8.31% at December 31, 2024, compared with 8.38% at September 30, 2024 and 7.51% at December 31, 2023. The decreases from the linked quarter were due to increases in risk-weighted assets and average total assets partially offset by retained earnings growth. The increases from the same period last year were primarily due to the issuance of $165.0 million of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B, at a rate of 8.00% in the second quarter of 2024.

No shares of common stock were repurchased under the share repurchase program in the fourth quarter of 2024. Total remaining buyback authority under the share repurchase program was $126.0 million at December 31, 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 March 14, 2025 to shareholders of record at the close of business on February 28, 2025.

On January 6, 2025, 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 $20.00 per share, equivalent to $0.5000 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 February 3, 2025 to shareholders of record of the preferred stock as of the close of business on January 17, 2025.

Conference Call Information

The Company will review its fourth quarter financial results today at 8:00 a.m. Hawai‘i Time (1:00 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: https://register-conf.media-server.com/register/BI24eacfe4bc38408fa2cf3382f4c7a832. A replay of the conference call will be available for one year beginning at approximately 11:00 a.m. Hawai‘i Time on Monday, January 27, 2025. 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 quarters ended March 31, 2024, June 30, 2024 and September 30, 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.