BOH - Earnings call transcript Q3 2018 | Bank of Hawaii Corporation

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Operator

Good day, ladies and gentlemen. And welcome to the Bank of Hawaii Corporation Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. And later, we will conduct a question-and-answer session and our instructions will follow at that time. [Operator Instructions] And as a reminder, this conference is being recorded. to call like to now would hand over the Ms. I Wyrick. Cindy Investor Director of Relations. begin. you Ma'am, may

Cindy Wyrick

the Amanda. our Risk you, you as results and our With us Thank or Chief Chairman, is Officer, for today of President for Dean me the and today review Peter Thank Sellers. we morning Financial joining Officer, Good Ho; Mary good CEO, quarter XXXX. Chief third afternoon, everyone. Shigemura;

And will started, variety get you me we contain are some assumptions let call statements. actual of results a call we Before may from today's reasonable, forward-looking I'd now over differ turn remind And like while the are the our Peter believe to materially conference there projected. to those reasons Ho.

Peter Ho

thanks us And for Thanks joining Cindy. morning, today. Good everyone.

good XXXX for of Hawaii. another quarter of was Bank one Third

quarter reduce primarily quarter and linked over up deposits, result and quarters basis. Adjusted year. flat X.X% and the up average X.X% asset the our X.X% previous decision of third addition our and $XX.X and the were and capital last to quarter In with deposits same increased to in Deposits with both Notably of and remained increased decreased total of financial commercial on end last consumer billion prior X.X%. past public our with X.X% we've the reduction year the liquidity previous commercial loans. the with from discussed couple the loans as public core strong the for to are remains solid Compared Loans and up previous calls. of robust. quarter from levels deposits, good year-over-year at consumer the deposits compared growth year, quite quality results, quarter,

commercial satisfied with in deposit areas. our also and consumer particular our remain and deposit betas in We betas quite our

ask this on financial me Mary additional quality. Dean our asset Dean? on and with some quarter, you comment to performance details let provide then Now our will

Dean Shigemura

was and second XXXX in quarter $X.XX $X.XX share, quarter $X.XX income the the share or per last million, Net million, for Peter. $XX.X you, compared quarter million to $XX.X third third of year. in Thank or share the per $XX.X or per

Our was our quarter X.XX%, equity was the ratio and efficiency was on assets on XX.XX% XX.XX%. return the during third return

the was interest interest net the million $X.X second X.XX%, reported previous income from from the from the was third a in and last the margin basis from quarter basis $XXX.X third year. up up $X.X of up on quarter last Our up third the million million, three XX Net year. same basis quarter of and quarter points XXXX quarter for quarter points

Our deposit beta previous XX% improved during the to to XX% the third decreasing quarter. quarter of in XXXX, compared

million in a million $XX.X we same million totaled of will Mary income the in non-interest expense year. XXXX. a previous $XX.X decrease recorded million compared last with quarter of XXXX quarter quarter. the $X.X above million be $X.X the quarter XX.XX%, about XXXX, during items compared XXXX, million last expenses. expect million expect than between of quarter compensation. share had expense quarter result We the same we to XXXX. non-interest tax quarter were effective of largely second quarter to million the approximately in Class fourth the full included related of third The of in the in severance XXXX, based million the third be included of Non-interest change to of year. expense income to quarter items XXXX were some our in this $XX of a second last significant and Non-interest and for in There million The quarter non-interest the Non-interest Tax the a quarter year, quarter Reform. credit compared seasonal B lower million the XXXX was be negative in the no during in we adjustment previous previous in effective rate XX%. discuss or quarter tax As to during $XX.X the $XX.X expect the a third in and XX% XX.XX% There third with or quarter Non-interest conversion in as significant of income quarter $X.X third in in expenses later, reduction XXXX. the Currently, $XX.X of income. no XXXX non-interest for currently third the third the and The which of year with $XX.X the income rate the totaled in expenses income and provision X.X% trust was of XXXX to partially ratio. for X.X% in banking mortgage quarter $X Visa and due fourth is offset XX.XX% normally fourth of by of quarter XXXX

at the same of for was of during $X.X was the third amortization of positive year. of The We previous million billion during the million at primarily duration years treasuries points. XXX third the last the quarter $X.X securities. portfolio the portfolio of quarter The which and The the duration maturity the years a portfolio duration in was Premium held X.XX quarter. the differential quarter the XXXX. XX million X.XX was mortgage-backed total reinvestment securities were of from comprised during available-for-sale purchased and and quarter was was $XX.X $X.X in X.XX to end down portfolio a quarter end of investment the million years. quarter, Our the third total basis

Peter quarter. during third growth As the X.X% loan of we mentioned, had

in flat commercial our continued loan declines is to deposits to by growth expect our full the mid digits. of single fairly be consumer continue in to Deposit our public we upper growth time XXXX, offset and may to the in growth to expected remain For year deposits. remain as

third equity total was quarter. the at of shareholders end Our $X.XX billion the

XX.XX% leverage was ratio Tier capital and our X.XX%. was X ratio Tier Our X

million. of quarter, stock net repurchased at declared per the XX or common repurchased XXX,XXX a XXXX. for During Xst out in and total dividends of We of million And $XX.X October between of cost a share $X.XX shares $X.X total we Board quarter income of a cost October paid the for of dividend fourth an our XX% shares $XX.X million. and finally, additional XX,XXX

I'll the turn call over Now, to Sellers. Mary

Mary Sellers

Accordingly, allowance the to and was the $X.X the of this unchanged compared in quarter unfunded Thank of down the basis period X.XX% the basis was growth. focused $X.X X.XX%, loans credit charge-offs $X.X you, million calibrating quarter West million or disciplined of ratio or the to and at the consistent totaled quarter, of leverage quarter company's call of underwriting needs XX.X credit XXXX our XX loans loan loan third with total you'll with XXXX, million economy at year-over-year. Dean. with were end. $X.X our assist markets loans We point $XX.X Comparatively, end past average we third previous reserve credit recall, as performance. from allowance million Restructured for at or of XXXX. Net and quarter, on in the leases to optimize recorded. continue back mix for At total the or based asset loans the lending $XX.X period period, remain $X.X the experience not on at basis linked the and the move end to continue down end customers' totaled or included provision loan points The down mortgage several and turn in due basis million end Hawaii the net and the past years. six Peter. credit million due total million to XXXX. last $XX loans third the at $X.X end down for were continuing readjusted total quality million end second cycle, to markets and quarter linked levels outstanding, see given as commitments at quarter, at approach end the were non-accrual net XXXX million the our meet assets of those and for And in $XXX,XXX and of points I'll million still third quarter lease down million annualized. the days same well-positioned points $X.X charge-offs The customers and X.XX% quarter million quarter, the the the reflects second the quarter third of or as annualized the second days mix next was we as through several and loan now the Hawaii of Non-performing $XXX.X or our through the points from accruing for quarter as and remain the exiting to $X.X million Pacific were third the or Loans quarter, ease. strength the of modified five XXXX. well and over structures volatility more losses years, interest year. of we of strategically quality greater past and more $X.X of quarter the the last continued $X.X of basis XX the charge-offs year-over-year. two period million two accounted from for of the to and XX The the Residential allowance over while loans products we've to of

Peter Ho

Mary. you, steady performance real tourism economy The Thank construction, to Hawaii estate market continued stable strong of but well rising to Hawaii's perform due and prices. continues

unemployment X.X% nationally. X.X% rate the unemployment September which compared low statewide was of in rate remains Our to very

from Our last levels grow visitor of industry continues to record year. the

the same with on the increased August, our months median larger arrivals condominium strong first visitor of market compared in four period increased spending visitor to saw with single-family XXXX. visitor X.X% eight median continues period primary year. in XXXX, growth Year-to-date Islands XXXX. of month a same last both of visitor the price during compared first and home a of sales and spending through nine increased X.X% arrivals. And estate Oahu, total the remain also The X.X% Real price Hawaiian increased The all X.X%.

of the for September, median condominium Oahu During $XXX,XXX. the us your price the now end inventory decreased And new for home on to X.X% X.X% XXXX. the months the months record sales and month volume again we'd the to for high of nine-month single-family a home respond X.X of for Months with single-family were decreased to single-family at and saw tight the be quarter for Thanks period happy condominiums. continue sales remain homes and of questions. Inventories X.X of today. compared joining

Operator

Davidson. first [Operator line D. comes Instructions] Jeff A. of of question Rulis the from a Our

is Your line open.

Jeff Rulis

morning. Good Thanks.

seeing you on interested that And segment. Are lending category. success You auto you customers limited guys the from it what there? in just your continue to that competition of I'm have hearing are the market? pretty that competition Is good success in in based?

Peter Ho

a past. more within active in Well, attack frankly the a end to also frankly. it's have as thinking a market successful standpoint, place I'd we business the just quite the management haven't them leadership And we've We've best spectrum. higher get that market as we that quality pick allowing we're various in share in towards to some skewing while we've through from quite active the for markets the core market while. and had a in little team beginning probably ways in the That's been our through to been where have up pricing we been of say a cycles.

several allowed us quarters things the to perform So those now. for well has combination of

Jeff Rulis

Great. maybe of And year. absent balance commercial for in of deposit the piece the be thoughts growth then your just maybe deposit just XXXX, and kind runoff public expectations the I'd on Peter consumer interested

Peter Ho

Yes.

deposit of aggregate think our dealing with so the have I overall we government levels quarter book. another or in

this or we've standpoint Dean’s a three deposits just getting from volatility from quarters weren't down, for talked in So helping great about standpoint. a a and now couple us progress where made pricing

the pretty as We're a we couple lot substantial of troops is quality, Jeff well balance that in everyone well. there commercial to so a cycles, and pretty for try was million growing growth left to in the these Consumer Probably headwind team of that the similar off well. That's have beginning and front deposits. really the to little pretty government through looking we're terms think is I that, way a book part putting in think commercial the deposit drive frothiness now be. quality understandably. as up performing book's to had in work there. story getting going The the just stand the start overcome. going obviously I to stable. that of in Similar book to market not sheet. we frankly is-- once on face sustainable better going charged book we repricing of book lagging beta on good be standpoint to book That time-space we're commercial emphasis a a performing story bit. lifts year. a the there. through it's $XXX government And burn We're the a things think to The but us I move end, what little Consumer, first from

as think I So I a we basis segment the of balance but could your on throughout that hang would sheet. your year-on- to to grow the that on somewhat to we year question, look on hope XXXX, spectacular deposit steady within

Jeff Rulis

of rate kind QX is maybe XX% for one XX%, for it XX%, last expected? I variance Great, any there. year-to-date one comments for tax on reason to your guess true-up thanks Is the that's then on a in the around the Peter. Dean. And comments, yes

Dean Shigemura

did the that quarter in but fourth into rate a of down, have quarter, forecasted. don't the brought We the we looking that Yes. items discrete couple have right any tax now third

do we have true-ups So occurring.

So to XX% it's XX%. could move right bit, now it but a

Operator

question Lynch. is of line Bank Ebrahim Poonawala, next Our Merrill America of the from

open. is line Your

Ebrahim Poonawala

Good morning, guys.

sort rate does ratio deposit following if growth. up we've what of one your the continue growth around assumption? hikes so, a drift the It can to -- if in to loan your on get resembles higher Fed? seen you assuming comments you the And, Can from around expect that like should XXXX. we is Just we about deposit year fair sort next to margin loan talk of expectations sound Dean

Peter Ho

Sure.

hand it rather it than Dean. start I'll So to over

to begin with. --we ratio you loan have know, deposit as So we're still still pretty a to geared conservatively

loan I We'll to see the orders. be we're right. to think we've guided to past growth of hang as in on going as erosion suspect able you're some couple that I

boy X%, think good most recent growth mind, this is looking I solid X%. deposit still quarter like in We're that. we're yes, So, something and at for annualized X% X% it call my

begin our a So, which pretty to going loans to yes, feel that's erode me good. that's makes ratio widespread and and deposit into

point. are where We this are we at

Dean Shigemura

third more and of And the margin, looking we'll into at the similar past what pick and results to up we've question that's to your the quarter in we're fourth points, experiencing If three curve similar Fed out a continues, the probably quarter little answer next looking about the about year. if bit been does margin. steep in where terms the than basis in

Ebrahim Poonawala

it. Got

do to I'll the the pressure island you about tie up? talk sort the seeing on can it deposit the Are you on So any retail just your margin offer on and is competition expect side front? of And -- continue just to rates picking consumer deposit to like raise in trend higher. you to that commercial

Peter Ho

say the segment I'd it talking you're Yes. that depends on about. that

the so on obviously time get smaller market. client into are larger at commercial the rationally. stake, the an custom you basis end both a have pretty where segment, there's money at priced We're just been awful lower people But of think and that I bidding deposit one-off lot in for deposits. this when seeing point consumer relationships types

Eric Martinuzzi

And our from next Thank Sandler question Deer of you. Aaron is of line O'Neill.

is line open. Your

Aaron Deer

the you're investment Hi, good would growth fund that securities flows year your given Peter, that I suggest next using coming loan or for morning, into be everyone. cash growth. to off outlook deposit going loan heading to guess

are growth if your the I that's expectations overall earning what for So XXXX? in case, asset guess

Dean Shigemura

--based really be It'll the deposit the on on growth.

the what earning experience our growth we growth. low asset that's digits single for of kind and --would be if expectation So deposit

Peter Ho

Right.

Aaron Deer

on carrying related related a Was costs shares there modest was the some the said shares there Okay of Visa loss that to securities no or this B this quarter Class just other sale and conversion you then any ratio was those expenses and quarter. were I think kind? that

Dean Shigemura

to the sale. Visa related for all That's the cost carrying

Operator

Our of Bohlen next KBW. Jackie question from the a line is of

Your line is open.

Jackie Bohlen

Hi, everyone. good morning,

little of quarter. securities you and base call on in so. you purchases mentioned the are on keep in I touching as when the still the had do that up in Just third the quarter yield quarter case short we the Was know a spoke to working bit good you that giving differential to duration last that well? the

Dean Shigemura

a bit mean portfolio, we're of actually the more little overall look I flat. if duration at balanced. It you was the pretty

achieve just were do see through yield able So we the to --get rates better a that we a-- the market. higher in

Jackie Bohlen

no purely differential, a so differential shift rate and which driven or the quarter Okay, driven. in if quarter's quarter's anything purchases basis between and is on market last increase this linked

Dean Shigemura

much, Pretty yes.

Peter Ho

duration Yes, is flat.

Dean Shigemura

Duration yes. flat, is

Jackie Bohlen

know just fee how source and just wonder of about regulation then and everything. thinking if it's income? been I update with that on an attention provide I to Peter, and you could a pressure you're Okay secondly,

So just what is your thinking on that?

Peter Ho

fee big that's the has casualty the what's latest a a rate been we've is It side has guess really obviously what I Well, pretty probably done of mortgage seen on impacted production. where in hit business. income refinanced and environment of the result happening

see I near in So relief in any that future. space don't the

income those analysis percentage is at account have that as higher up. flows think rates a hit as rising also moved credited getting rates I by are deposit

so, do. might So now Longer million that's million think but we're what for the have a move on hang we're right if looking stick I Jackie. next - within be where up, are $XX we term, for to to range few thoughts here how now. fees the to on we able they $XX level fee to can quarter we or the trying

Jackie Bohlen

some those provide call. I areas as would for of on plan future you and to you'll assume start updates layout Okay growth, of

Peter Ho

Sure.

Operator

remarks. no time, questions. like conference Wyrick to And over the turn for this back are Cindy there I'd closing to at further any Ms.

Cindy Wyrick

continued Bank for everyone for us in joining interest of your thank Hawaii. to like I'd and today,

any or topics great if discussed additional have feel everyone. you free me please And of on today. further day. questions clarification you the contact Thank have need always, As to a

Operator

Ladies gentlemen, you conclude participation for program. does thank the today's in This and your conference.

day. You disconnect. may great a now Everyone have

Bank of Hawaii (BOH) 22 Oct 182018 Q3 Earnings call transcript