Bank of Hawaii Corporation

Ladies and gentlemen, thank you for standing by and welcome to the Bank of Hawaii Corporation first quarter 2022 earnings call. At this time, all participants are in a listen-only mode. There will be a question and answer session after the prepared remarks. If you would like to ask a question during the session, please press star 1. If you require any further assistance, please press star 0. I would now like to turn the call over to your host, Janelle Higa. You may begin.

Thank you, Kevin. 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. We appreciate your interest in Bank of Hawaii. First quarter was a good start to 2022 for the organization. As is our custom, I'll share with you some thoughts on the broader market here in the islands. I'll then turn the call over to Dean to talk about the financials. and then he'll turn the call over to Mary to give you some perspective on the credit side, and then I'll close with some concluding thoughts, and then we'd be happy to take your questions. So beginning with the economy, things appear to be shaping up, stable, and improving is what I would call it. Here you see our unemployment numbers, unemployment now down to 4.1%. I think when you look at the forecast numbers out that UHERO has put in there, obviously I think clearly those are due for adjustment and I think probably impacted by some of the changes of the Bureau of Labor Statistics. So all in all, I think a pretty good performance unemployment-wise. When you look at some of the high-frequency data that the university also puts out, what they call their economic pulse, which is an aggregation of a bunch of high-frequency data, you'll see that Really, that rating is up to its highest level ever in the new environment that we find ourselves in. So as of the past couple of weeks, that rating has hit 81 points. To give you some frame of reference, our prior peak was 75 in the summer of 2020, just before Delta hit. And then those numbers took a dip with Delta and then Omicron. So nice to be back. up at a high and hopefully moving forward from there. Switching to real estate, here you see that the real estate market, at least here on Oahu, our primary market, continues to do quite well. So price points still elevated at very high levels, both single-family as well as condominium. And also you see that the pervasive inventory or shortage of inventory continues to be the case and not likely to see much change in that environment anytime soon. And then, therefore, I wouldn't expect to see too much erosion in price points, certainly not in 2022. Next slide. Switching over to the visitor side, this is really an evolving story. You can see in the chart that 2022 levels are getting closer to 2019 levels or pre-pandemic levels. The numbers are, from an arrivals standpoint, down still 25% from 2019, but that's really the tale of two marketplaces. U.S. arrivals, both east and west U.S. arrivals, are up year-to-date 8% from 2019, but clearly the drag and what's dragging down the entire market are the Japanese down 98%, Canada down 61%, and other international marketplaces down 70%. Interestingly, when we look at spending patterns, the news isn't quite as bad there. Spending is down, and remember I told you arrivals were down 25%, but spending is only down 9.9% this year through February. And this reflects a very robust U.S. consumer. So U.S. spending or U.S. market spending in the islands year-to-date February is up 27% and offset somewhat by Japan, Canada, and other international. Just to finish off on the visitor side, rev par performance, which as you can imagine has been quite difficult through the pandemic, is really starting to look up. So The last three months, beginning in December, REVPAR in the state was actually plus 7.6% versus 2019 levels. January was off slightly at minus 1.3% versus 2019. And February bounced back nicely to plus 4% versus 2019. So all in all, what we see in the visitor segment is... kind of a reasonable performance given what's happening in the various marketplaces. I think a good, a fair amount of, a fair case for optimism as we look forward and hopefully welcome the Japanese visitors back, hopefully towards the tail end of this year. So that's it for my opening. Let me now turn the call over to Dean of Share of the Financials. Dean?