Bank of Hawaii Corporation

Good day and thank you for standing by. Welcome to the Bank of Hawaii Corporation first quarter 2021 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 then 1 on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star then 0. I would now like to hand the conference over to one of your speakers today, Janelle Higa, Manager of Investor Relations. Ma'am, please go ahead.

Thank you, Michelle, and good morning, good afternoon, everyone. Thank you for joining us today. On the call with me this morning is our Chairman, President, and CEO, Peter Ho, our Chief Financial Officer, Dean Shigemura, and our Chief Risk Officer, Mary Sellers. Before we get started, let me remind you that today's conference call will contain some forward-looking statements. And while we believe our assumptions are reasonable, there are a variety of reasons The actual results may differ materially from those projected. During the call, we'll be referencing a slide presentation as well as the earnings release. A copy of the presentation and release are available on our website, boh.com, under investor relations. And now I'd like to turn the call over to Peter Ho.

Thanks, Janelle. Aloha, everyone. Thank you for taking the time to listen in. Conditions in Hawaii and in the Hawaiian economy in particular are improving from 2020 levels. Tourism appears poised to begin the process of reemerging after a dismal year last year, and the viral environment appears controlled here in Hawaii. Home prices on Oahu, our primary market, continue to perform well. Bank of Hawaii had another solid quarter of performance for the period ended March 31st. Credit risk remained stable. Expense management adjusted for one-time items was strong. Capital and liquidity are growing. In short, we continue to weather conditions well and are positioned to grow as, grow nicely as the economy allows. At this time, I'd like to highlight a few slides to give you a little more color on operating conditions. Then I'll ask Dean to provide you an overview of our finances, our financials for the quarter, and the Mayor will discuss credit quality. I'll conclude with some thoughts on our digital banking efforts, and we'd be delighted to take your questions after that. So, beginning with slide number two, you see that unemployment here in the islands remains high by national standards, but is moving in the right direction for us at this point, down to about 9% as of the first quarter. If you turn to the next slide, you'll see that UHERO, which is the University of Hawaii Economic Research Organization and is the really the organization that we base a number of our financial models and risk metrics off of has actually revised positively, so in a downward revision on unemployment for both 2021 and 2022. Here on this slide, you see that we've been revised downward on unemployment from 10.9 percent in the December forecast to 7.1 percent in the most recent March forecast. and then for 22 down from 5.6 percent in the prior forecast to 4.4 percent for the March forecast. This obviously is having a positive impact on forecasted GDP as well as personal income. Here you see that 2020 GDP was revised upwards to minus 7.5 percent from minus 10.2 percent previously. And 2021 has been revised upward pretty significantly to plus 3.7 percent for the year versus basically flat for the year in the prior forecast. Much of this is driven by, I think, the improving unemployment situation, but also personal income, which for 21 is forecast to increase again on a percentage basis versus 2020, which was up already 6 percent for last year. Turn to the next slide. Real estate market in Hawaii, like many markets across the nation, continues to perform exceptionally well. So, on the single-family home side, both year-to-date as well as March period-to-period numbers are up 17.3 percent for single-family home. Median sales prices, I think, perhaps more significantly inventory is just getting down to, I think, almost record levels. So we're now down to nine days on market for a single-family home, and inventory has dropped to 1.3 months. Condominium side performing well, not quite as well as single-family, though. Median sales price year-to-date up 5.8%, and March point-to-point up 3.7%. Inventory conditions on the condo side remain pretty interesting as well with median days on market at 14 and inventory at 2.9 months. Arrivals into Hawaii are beginning to pick up nicely. So, you may recall that most of our forecasts had basically visitor arrivals getting back to two-thirds historic levels by year end. Here you see in this chart that we're well on our way to that path. So the experience we're having to date is indicating a strong trend in the visitor industry. And anecdotally, when you speak to people in the industry, the hotels and the airlines, there's a good amount of optimism for both for the summer of this year being pretty darn strong. And most of that is, as you would imagine, being driven by U.S. domestic. International travel is still pretty muted with most of our international markets still, frankly, struggling with the pandemic and working to normalize, I think, to a level similar to our domestic markets. COVID cases in Hawaii are performing well. So, you see on this chart, we are down near the bottom in terms of average cases per day per 100,000. That's a good sign and has really been pretty consistent through the entire pandemic. On the next slide, you'll see vaccination rates in Hawaii are towards the upper bound of the country, so getting good uptake there. Obviously, looking forward to getting as many Hawaii residents as possible vaccinated so that hopefully we can move towards herd immunity in the not-too-distant future. So I'll stop here, and let me turn the call over to Dean, who will update you on our finances for the first quarter. Dean?