Bank of Hawaii Corporation

Good day and thank you for standing by. Welcome to Bank of Hawaii Corporation's second quarter 2024 earnings conference call. At this time, all participants are on 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 automatic message advising your hand is raised. Please note that today's conference may be recorded. I will now hand the conference over to your speaker host. Chang Park, Senior Vice President Investor Relations Director. Please go ahead.

Thank you. Good morning and good afternoon. Thank you for joining us today as we discuss the financial results for the second quarter of 2024. Joining me today is our Chairman and CEO, Peter Ho, CFO, Dean Shigemura, and Chief Risk Officer, Brad Shearson. 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 that the actual results may differ materially from those projected. During the call this morning, we'll be referencing a slide presentation as well as the earnings release. Both of these are available on our website, boh.com, on the investor relations link. And now I would like to turn the call over to Peter.

Thanks, Chang. Aloha, everyone. We appreciate your interest in Bank of Hawaii. Before we get started, I'd like to welcome Senior Executive Vice President Brad Sattenberg to the team and to the call. Brad is our new Deputy Chief Financial Officer and joins us from Luther Burbank Bank, where he held the role of CFO. Brad will be working closely with Dean over the coming months. Welcome, Brad. I'd also like to welcome to the call Jim Polk. Jim is a 25-year member of the Bank of Hawaii team, most recently as Vice Chair and Chief Banking Officer. This past Friday, Jim was promoted to president and chief banking officer. Jim will continue with his responsibilities for commercial banking and wealth management, and now adds our retail banking operation as well. I will continue as chairman and CEO, and Jim will continue to report directly to me. Bank of Hawaii produced yet another solid financial performance for the second quarter of 2024. As was anticipated, Net interest margin and net interest income advanced in the quarter for the first time in a number of quarters. Average loan and deposit levels were stable, albeit off nominally in the quarter. Credit quality remained and remains pristine. Capital levels were aided significantly by our successful June preferred raise. I'll start off with some commentary on the balance sheet and then touch on broader market conditions in Hawaii. I'll then hand the call over to Brad Sherrison for some brief but positive credit comments, and Dean will then share with you some more granular color on the financials. As I mentioned, deposits and loan levels were stable in the quarter. Looking forward, we see evidence of modest improvement in loan growth for the second half of 2024. Deposit levels look to be relatively flat as we focus on taking a disciplined approach to pricing levels and prepare for a potential pivot to a lower-rate environment. Capital levels advanced meaningfully as a result of last month's $165 million preferred capital raise, which was well oversubscribed with over 90% institutional interest. Turning to deposits, we continue to use our brand and market position in what is truly a unique deposit market to maintain a consistent and stable deposit base at substantially lower costs than our national peer set. Further, Non-interest-bearing deposits continue to stabilize, with average non-interest-bearing deposits in May, June, and now into July flat at $5.3 billion. The Hawaiian economy, from a jobs perspective, continues to outperform the broader market, and UHERO forecasts continued stability. The visitor market continues to be impacted by the tragic Lahaina fires. Visitor spending and visitor arrivals were down 4-plus percent in both categories, in May year over year, but are up 6% and 4% in each category ex-Maui. The Japan market, which as you know, has been slow to recover, was up 26% on spend in May and up 35% on arrivals in May, but still down well over 50% from pre-pandemic levels. As you can see, hotels continue to perform steadily from a REBPAR perspective. Residential real estate on Oahu remained steady with median sale prices for both single-family homes and condominiums up 3.3% and 2.0% in the first half of the year from a year ago. Median days on market remain below a month for both single-family homes and condominiums. Inventory conditions remain tight. And now let me turn the call over to Brad Sherson.