First Hawaiian, Inc.

Good day, and thank you for standing by. Welcome to the first Hawaiian second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kevin Haseyama, Investor Relations Manager. Please go ahead.

Thank you, Shannon. And thank you everyone for joining us as we review our financial results for the second quarter of 2024. With me today are Bob Harrison, Chairman, President, and CEO, Jamie Moses, Chief Financial Officer, and Lee Nakamura, Chief Risk Officer. We have prepared a slide presentation that we will refer to in our remarks today. The presentation is available for downloading and viewing on our website at fhb.com in the investor relations section. During today's call, we will be making statements, forward-looking statements. So please refer to slide one for our safe harbor statement. We may also discuss certain non-GAAP financial measures. The appendix to this presentation contains reconciliations of these non-GAAP financial measurements to the most directly comparable GAAP measurements. And now I'll turn the call over to Bob.

Good morning, everyone. I'll start by giving a quick overview of the local economy. Hawaii economy continues to perform well. The state unemployment rate has remained low. Tours have been steady, and we enjoy a healthy construction industry. Statewide seasonally adjusted unemployment rate for June was 2.9% compared to the national rate of 4.1%. Through May, total visitor arrivals were down 4.1% and spending was down 4.9% compared to 2023 levels. The year-over-year decline was primarily due to the drop in visitors to Maui. On a year-to-day basis, Kauai and Hawaii Island also saw small declines in arrivals. Japanese visitors continued to return to Hawaii, but the numbers remain well below pre-pandemic levels. The housing market has remained relatively stable despite reduced activity levels. In June, the median sales price for a single family home on Oahu was $1.1 million, 6.7% higher than March of this year. The median sales price for condos on Oahu was $530,000, 3.9% below last year. Turning to slide two, I'll give an overview of our second quarter results. Overall, we're very pleased with our strong financial performance We had good loan production, improving deposit trends, and a well-controlled cost of deposits at 1.7%. Credit quality remained excellent, and several key credit metrics improved in the quarter. Our results also benefited from solid non-interest income and good expense discipline. Additionally, we believe that the trends we saw in the quarter put us in a good position for a strong second half of the year. Turning to slide three, The balance sheet remains a source of strength. We continued to use the runoff in the investment portfolio to fund loan growth and reduce high cost deposits. We also maintained ample liquidity. Our deposit mix continued to show signs of stability. The ratio of non-interest bearing deposits to total deposits was unchanged from the prior quarter at 34%. We remained well capitalized and our capital levels continued to grow during the quarter. Turning to slide four, total loans grew by $39.7 million over the prior quarter. Overall, we had good production in several areas, led by draws on existing construction loans and new leasing opportunities. CNI production was driven by an increase of about $150 million in dealer flooring loans. This was partially offset by paydowns and payoffs of other CNI loans. In particular, we sold two criticized SNCC loans at par that totaled $27.5 million. The decline in the consumer loan balances was due to runoff in the indirect auto portfolio. Looking forward, the pipeline is strong, and we think the production will pick up in the second half of the year, weighted towards the fourth quarter. Our outlook for the full year is low single-digit loan growth. Now I'll turn it over to Jamie.