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What changed in BANK OF HAWAII CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of BANK OF HAWAII CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+370 added−347 removedSource: 10-K (2025-12-31) vs 10-K (2024-12-31)

Top changes in BANK OF HAWAII CORP's 2025 10-K

370 paragraphs added · 347 removed · 284 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

44 edited+13 added−13 removed56 unchanged
Biggest changeTo help maintain Hawaiʻi’s special culture of ‘ohana and working together toward common goals, continued attention was paid to engaging teammates in a hybrid environment. Based on employee feedback from surveys, online and in-person sessions were continued in 2024 to connect with employees and encourage collaboration.
Biggest changeAdditionally, with our continued focus on creating digitally fluent employees, in 2025 we rolled out three training modules for employees to complete in order to gain access to our artificial intelligence (“AI”) tool Microsoft Co-Pilot. To help maintain Hawaiʻi’s special culture of ‘ohana and working together toward common goals, continued attention was paid to engaging teammates in a hybrid environment.
Provisions also limit or 3 Table of Contents place significant burdens and costs on activities traditionally conducted by banking organizations, such as arranging and participating in swap and derivative transactions, proprietary trading and investing in private equity and other funds.
Provisions also limit or place significant burdens and costs on activities traditionally conducted by banking organizations, 3 Table of Contents such as arranging and participating in swap and derivative transactions, proprietary trading and investing in private equity and other funds.
As of December 31, 2024, the Bank was classified as “well capitalized.” The classification of a depository institution under one of the categories set out above is primarily for the purpose of applying the prompt corrective actions, and is not intended to be, nor should it be interpreted as, a representation of the overall financial condition or the prospects of that financial institution.
As of December 31, 2025, the Bank was classified as “well capitalized.” The classification of a depository institution under one of the categories set out above is primarily for the purpose of applying the prompt corrective actions, and is not intended to be, nor should it be interpreted as, a representation of the overall financial condition or the prospects of that financial institution.
See Note 11 in Item 8. “Notes to Consolidated Financial Statements” for more information. Dividend Restrictions The Parent is a legal entity separate and distinct from the Bank. The Parent’s principal source of funds to pay dividends on its common stock and preferred stock and to service its liabilities is dividends from the Bank.
See Note 10 in Item 8. “Notes to Consolidated Financial Statements” for more information. Dividend Restrictions The Parent is a legal entity separate and distinct from the Bank. The Parent’s principal source of funds to pay dividends on its common stock and preferred stock and to service its liabilities is dividends from the Bank.
The right of the Parent, its shareholders, and creditors to participate in any distribution of the assets or earnings of its subsidiaries is also subject to the prior claims of creditors of those subsidiaries. For information regarding the limitations on the Bank’s ability to pay dividends to the Parent, see Note 11 in Item 8.
The right of the Parent, its shareholders, and creditors to participate in any distribution of the assets or earnings of its subsidiaries is also subject to the prior claims of creditors of those subsidiaries. For information regarding the limitations on the Bank’s ability to pay dividends to the Parent, see Note 10 in Item 8.
Among other things, the AMLA codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the U.S. Department of the Treasury to promulgate priorities for anti-money laundering and countering the financing of terrorism policy' requires the development of standards by the U.S.
Among other things, the AMLA codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the U.S. Department of the Treasury to promulgate priorities for anti-money laundering and countering the financing of terrorism policy requires the development of standards by the U.S.
Some of our competitors are not subject to the same level of regulation and oversight that is required of banks and BHCs, and receive favorable tax treatment. As a result, some of our competitors may have lower cost structures.
Some of our competitors are not subject to the same level of regulation and oversight that is required of banks and BHCs, allowing them to receive favorable tax treatment. As a result, some of our competitors may have lower cost structures.
The Volcker Rule In December 2013, the Federal Reserve, the OCC, the FDIC, the SEC, and the Commodities Futures Trading Commission issued final rules to implement certain provisions of the Dodd-Frank Act commonly known as the “Volcker Rule.” The Volcker Rule, as amended on August 20, 2019, generally prohibits U.S. banks from engaging in proprietary trading and restricts those banking entities from sponsoring, investing in, or having certain relationships with hedge funds and private equity funds.
The Volcker Rule In 2013, the FRB, the OCC, the FDIC, the SEC, and the Commodities Futures Trading Commission issued final rules to implement certain provisions of the Dodd-Frank Act commonly known as the “Volcker Rule.” The Volcker Rule, as amended on August 20, 2019, generally prohibits U.S. banks from engaging in proprietary trading and restricts those banking entities from sponsoring, investing in, or having certain relationships with hedge funds and private equity funds.
The Community Reinvestment Act of 1977 (“CRA”) requires the appropriate federal banking agency, in connection with its examination of a bank, to assess the bank’s record in meeting the credit needs of the communities served by the bank, including low and moderate income neighborhoods.
Community Reinvestment and Consumer Protection Laws • Community Reinvestment . The Community Reinvestment Act of 1977 (“CRA”) requires the appropriate federal banking agency, in connection with its examination of a bank, to assess the bank’s record in meeting the credit needs of the communities served by the bank, including low- and moderate-income neighborhoods.
Skills and professional development training is provided to employees at all levels, with additional development sessions specifically targeted to managers and leaders. Making Leadership Excellence a Priority is a key component of the Employee Experience, and we need our leaders to deliver exceptional employee experiences and develop the successful workforce of tomorrow.
Future focused skills and professional development is provided to employees at all levels, with additional development sessions specifically targeted to managers and leaders. Making Leadership Excellence a Priority is a key component of the Employee Experience, and we need our leaders to deliver exceptional employee experiences and develop the workforce of tomorrow.
Federal bank regulators, state attorneys general and state and local consumer protection agencies may also seek to enforce consumer protection requirements and obtain these and other remedies, including regulatory sanctions, customer rescission rights, and civil money penalties.
Federal bank regulators, state attorneys 6 Table of Contents general and state and local consumer protection agencies may also seek to enforce consumer protection requirements and obtain these and other remedies, including regulatory sanctions, customer rescission rights, and civil money penalties.
Human Capital Management As of December 31, 2024, we employed 1,865 full-time equivalent employees, of which 1,732 are located in the State of Hawaiʻi, with the remainder located in Guam, other Pacific Islands, and other U.S. states. None of our employees are subject to a collective bargaining agreement.
Human Capital Management As of December 31, 2025, we employed 1,877 full-time equivalent employees, of which 1,729 are located in the State of Hawaiʻi, with the remainder located in Guam, other Pacific Islands, and other U.S. states. None of our employees are subject to a collective bargaining agreement.
Securities and Exchange Commission (the “SEC”). The SEC maintains a website, www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
The SEC maintains a website, www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
“Notes to Consolidated Financial Statements” for more information. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports can be found free of charge on our website at www.boh.com as soon as reasonably practicable after such material is electronically filed with or furnished to the U.S.
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports can be found free of charge on our website at www.boh.com as soon as reasonably practicable after such material is electronically filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”).
Under federal law, the Bank is subject to restrictions that limit the transfer of funds or other items of value to the Parent, and any other non-bank affiliates in “covered transactions.” In general, covered transactions include making loans to an affiliate, the purchase of or investment in the securities issued by an affiliate, the purchase of assets from an affiliate, the acceptance of securities issued by an affiliate as collateral security for a loan or extensions of credit to any person or company, the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate, or certain transactions with an affiliate that involve the borrowing or lending of securities and certain derivative transactions with an affiliate.
Under federal law, the Bank is subject to restrictions that limit the transfer of funds or other items of value to the Parent, and any other non-bank affiliates in “covered transactions.” In general, covered transactions include making loans to an affiliate, the purchase of or investment in the securities issued by an affiliate, the purchase of assets from an affiliate, the acceptance of securities issued by an affiliate as collateral security for a loan or extensions of credit to any person or company, the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate, or certain transactions with an affiliate that involve the borrowing or lending of securities and certain derivative transactions with an affiliate. 4 Table of Contents Unless an exemption applies, covered transactions by the Bank with a single affiliate are limited to 10% of the Bank’s capital and surplus, and with respect to all covered transactions with affiliates in the aggregate, they are limited to 20% of the Bank’s capital and surplus.
Depositor Preference In the event of the “liquidation or other resolution” of an insured depository institution, claims of insured and uninsured depositors for deposits payable in the United States (including the claims of the FDIC as subrogee of insured depositors), plus certain claims for administrative expenses of the FDIC as a receiver will have priority in payment ahead of unsecured creditors including, in the case of the Bank, the Parent.
Depositor Preference In the event of the “liquidation or other resolution” of an insured depository institution, claims of insured and uninsured depositors for deposits payable in the United States (including the claims of the FDIC as subrogee of insured depositors), plus certain claims for administrative expenses of the FDIC as a receiver will have priority in payment ahead of unsecured creditors including, in the case of the Bank, the Parent. 5 Table of Contents Other Safety and Soundness Regulations The federal banking agencies also have adopted guidelines prescribing safety and soundness standards.
Leadership and Employee Development: We are committed to the success of our teammates and have focused on their growth and development both personally and professionally. We nurture a collaborative, digitally connected workplace aligned to the changing needs of the work environment.
Our commitment is to create a workplace where every individual feels valued, known, empowered and inspired. Leadership and Employee Development: We are committed to the success of our teammates and have focused on their growth and development both personally and professionally. We nurture a collaborative, digitally connected workplace aligned to the changing needs of the work environment.
“Rising Team” enables managers to confidently facilitate sessions with their team and offers everyone the opportunity to share thoughts and feedback in real time on a variety of leadership themed topics, such as Psychological safety, Appreciation, Natural talents and Career horizons.
“Rising Team” enables managers to confidently facilitate kits with their team and offers everyone the opportunity to share thoughts and feedback in real time on a variety of leadership themed topics, such as Psychological Safety, Appreciation, Prioritization, Natural Talents as well as Mini-kit topics on Daily Energizers, Challenges and the Ideal Workspace.
The USA PATRIOT Act created new laws, regulations, and penalties, imposed significant new compliance and due diligence obligations, and expanded the application of those laws outside the U.S.
Bank Secrecy Act / Anti-Money Laundering Laws The Bank is subject to the Bank Secrecy Act and other anti-money laundering laws and regulations, including the USA PATRIOT Act of 2001. The USA PATRIOT Act created new laws, regulations, and penalties, imposed significant new compliance and due diligence obligations, and expanded the application of those laws outside the U.S.
The Company continues to monitor and implement rules, regulations, and interpretations of the Dodd-Frank Act as they are adopted and modified, and to evaluate their application to our current and future operations. Capital Requirements In July 2013, the FRB, the Office of the Comptroller of the Currency (the “OCC”) and the FDIC adopted new capital rules (the “Rules”).
The Company continues to monitor and implement rules, regulations, and interpretations of the Dodd-Frank Act as they are adopted and modified, and to evaluate their application to our current and future operations.
The Bank’s FDIC insurance assessment was $17.9 million in 2024, $28.3 million in 2023 and $6.5 million in 2022. The increase in the FDIC insurance during 2023 was primarily related to a special assessment, discussed below.
The Bank’s FDIC insurance assessment was $11.2 million in 2025, $17.9 million in 2024 and $28.3 million in 2023. The FDIC insurance expense for the years 2024 and 2023 was primarily related to a special assessment, discussed below.
These Rules were designed to help ensure that banks maintain strong capital positions by increasing both the quantity and quality of capital held by U.S. banking organizations.
Capital Requirements In 2013, the FRB, the Office of the Comptroller of the Currency (the “OCC”) and the FDIC adopted capital rules (the “Rules”) designed to help ensure that banks maintain strong capital positions by increasing both the quantity and quality of capital held by U.S. banking organizations.
Failure to comply with consumer protection requirements may also result in our failure to obtain required bank regulatory approvals for transactions the Bank may wish to pursue, or prohibit us from engaging in such transactions even if approval is not required. 6 Table of Contents Bank Secrecy Act / Anti-Money Laundering Laws The Bank is subject to the Bank Secrecy Act and other anti-money laundering laws and regulations, including the USA PATRIOT Act of 2001.
Failure to comply with consumer protection requirements may also result in our failure to obtain required bank regulatory approvals for transactions the Bank may wish to pursue or prohibit us from engaging in such transactions even if approval is not required.
Key areas of focus for us include: We believe in a work environment where teammates feel they belong and be their authentic selves leading them to thrive, contribute and succeed. As of December 31, 2024, approximately 88% of our workforce identifies as minorities (non-Caucasian) and approximately 61% of our employees are female.
Key areas of focus for us include: We believe in a work environment where teammates feel they belong and be their authentic selves leading them to thrive, contribute and succeed.
Ho, 59 Chairman and Chief Executive Officer since July 2010; President from April 2008 to July 2024. James C. Polk, 58 President since July 2024; Chief Banking Officer since January 2022; Chief Commercial Officer from January 2020 to December 2021; Vice Chair since June 2016. Dean Y. Shigemura, 61 Vice Chair since December 2017; Chief Financial Officer since March 2017.
Ho, 60 Chairman and Chief Executive Officer - July 2010-present. President - April 2008-July 2024. James C. Polk, 59 President and Chief Banking Officer - July 2024-present; Vice Chair and Chief Banking Officer - January 2022-July 2024; Vice Chair and Chief Commercial Officer - January 2020-December 2021; Vice Chair - 2016-present. Bradley S.
The Parent The Parent is registered as a BHC under the Bank Holding Company Act of 1956, as amended (the “BHC Act”), and is subject to the supervision of and to examination by the Board of Governors of the Federal Reserve (the “FRB”).
Financial institutions are expected to comply with such guidance and standards and to accordingly develop appropriate security controls and risk management process. The Parent The Parent is registered as a BHC under the Bank Holding Company Act of 1956, as amended (the “BHC Act”), and is subject to the supervision of and to examination by the Federal Reserve Bank (“FRB”).
Employee Benefits: We believe in enabling a healthy workforce and providing a benefits program that is designed to attract, retain, and engage employees. In addition to competitive insurance, healthcare, and retirement offerings, examples of more innovative and workforce-specific benefits offerings include: mortgage discount program, student loan assistance program, well-being sessions, and personal finance education.
In addition to competitive insurance, healthcare, and retirement offerings, examples of more innovative and workforce-specific benefits offerings include mortgage discount program, student loan assistance program, well-being sessions, and personal finance education. We continue to incorporate mental health, financial wellness, social health, community, and a positive employee experience in our well-being strategies, in addition to physical health.
In addition to the CRA, the Bank is subject to a number of federal laws designed to protect borrowers and promote lending to various sectors of the economy and population in connection with its lending activities. These include the Equal Credit Opportunity Act, the Truth-in-Lending Act, the Home Mortgage Disclosure Act and the Real Estate Settlement Procedures Act.
The Bank’s current CRA rating is “outstanding.” • Consumer Protection Laws . In addition to the CRA, the Bank is subject to a number of federal laws designed to protect borrowers and promote lending to various sectors of the economy and population in connection with its lending activities.
Federal banking regulators, pursuant to the Gramm-Leach-Bliley Act, have enacted regulations limiting the ability of banks and other financial institutions to disclose nonpublic consumer information to non-affiliated third parties. The regulations require disclosure of privacy policies and allow consumers to prevent certain personal information from being shared with non-affiliated third parties.
The regulations require disclosure of privacy policies and allow consumers to prevent certain personal information from being shared with non-affiliated third parties.
Subsequent adjustments increased the special assessment by $1.9 million to $16.6 million. These adjustments were accrued during the year ended December 31, 2024. The special assessment is being paid in eight quarterly installments, which began in June 2024.
Subsequent adjustments increased the special assessment by $1.9 million to $16.6 million. These adjustments were accrued during the year ended December 31, 2024. In 2025, the Bank’s portion of the special assessment was reduced, which decreased the Company’s FDIC insurance expense by $4.8 million.
We continue to incorporate mental health, financial well-being, social health, community, and a positive employee experience in their well-being strategies, in addition to physical health. In 2024, we expanded resources to support employees and actively sought new ways to foster an environment where employees feel empowered to bring their whole selves to work.
In 2025, we expanded resources to support employees and actively sought new ways to foster an environment where employees feel empowered to bring their whole selves to work. Health and Safety: The health and safety of our employees is a priority.
McGuirk, 55 Vice Chair and Chief Administrative Officer since September 2023; Senior Executive Vice President and Chief General Counsel from November 2020 to September 2023; Executive Vice President and General Counsel at Flagstar Bank from December 2014 to October 2020. Taryn L. Salmon, 54 Vice Chair and Chief Information and Operations Officer since April 2024. S.
McGuirk, 56 Vice Chair and Chief Administrative Officer - September 2023-present; Senior Executive Vice President and Chief General Counsel - November 2020-September 2023. From December 2014 to October 2020, Executive Vice President and General Counsel at Flagstar Bank (NYSE: FLG). Mr. McGuirk has over 25 years of financial services legal experience. Taryn L.
Other Safety and Soundness Regulations The federal banking agencies also have adopted guidelines prescribing safety and soundness standards. These guidelines establish general standards for internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, asset quality, earnings standards, compensation, fees and benefits.
These guidelines establish general standards for internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, asset quality, earnings standards, compensation, fees and benefits. In general, the guidelines require appropriate systems and practices to identify and manage the risks and exposures specified in the guidelines before capital becomes impaired.
Changes in applicable laws or regulations, or a change in the way such laws or regulations are interpreted by regulatory agencies or courts, may have a material impact on our business, operations, and earnings.
Changes in applicable laws or regulations, or a change in the way such laws or regulations are interpreted by regulatory agencies or courts, may have a material impact on our business, operations, and earnings. 2 Table of Contents The federal banking regulators regularly issue new guidance and standards, and update existing guidance and standards, regarding cybersecurity intended to enhance cyber risk management among financial institutions.
Health and Safety: The health and safety of our employees is a priority. We continue our commitment to workplace safety and workforce health to maintain business and operational continuity without diminishing our focus on both employee and customer safety. Information about our Executive Officers Listed below are executive officers of the Parent. Peter S.
We continue our commitment to workplace safety and workforce health to maintain business and operational continuity without diminishing our focus on both employee and customer safety. Information about our Executive Officers The following lists the names, ages, and positions held during the past five years of the executive officers of Bank of Hawaii Corporation as of December 31, 2025.
Key initiatives include the continued support of executive coaching to elevate leadership capabilities, a new senior leader development series called the Leadership Excellence Forum, a competitive Leadership Development Program, a hybrid Pathways to Professional Excellence cohort with 36 employees from Oahu, the neighbor islands and the West Pacific and an enhanced online performance management process that empowers the employee to own the first step of the performance review process.
Key initiatives include the continued support of executive coaching to elevate leadership capabilities, our senior leader development series called the Leadership Excellence Forum, a hybrid Pathways to Professional Excellence cohort with 38 employees from Oahu, the neighbor 7 Table of Contents islands and the West Pacific assisting our employees in reaching their educational goals by obtaining their first bachelor’s degree through our College Assistance Program and our Tuition Assistance Program for employees to take job-related courses at any accredited college.
Among our senior leaders and managers, 82% are minorities and 59% are female. We conduct regular external pay equity studies to evaluate compensation practices and confirm that gender pay gaps do not exist. Our commitment is to create a workplace where every individual feels valued, known, empowered and inspired.
As of December 31, 2025, approximately 89% of our workforce identifies as minorities (non-Caucasian) and approximately 61% of our employees are female: 35% of senior leaders and 61% of managers are women. We conduct regular external pay equity studies to evaluate compensation practices and confirm that gender pay gaps do not exist.
The enhanced focus encompasses the entire loan life cycle, including post-closing activities such as collections and servicing, and pre-application activities such as marketing and loan solicitation and origination. Violations of applicable consumer protection laws and regulations can result in significant potential liability from litigation brought by customers, including actual damages, restitution and attorneys’ fees.
Changes in applicable law or regulation, and in their application by regulators, may have a material effect on the business of the Company and the Bank. Violations of applicable consumer protection laws and regulations can result in significant potential liability from litigation brought by customers, including actual damages, restitution and attorneys’ fees.
“Recruit Connect” continued in 2024 to help teammates identify job opportunities within the Company and find out more about them. In some cases, sessions led to referred candidates joining the Bank, and to current employees finding a new career path.
Based on employee feedback from surveys, online and in-person sessions were continued in 2025 to connect with employees and encourage collaboration. “Recruit Connect” continued in 2025 to help teammates identify job opportunities within the Company and find out more about them.
Marco A. Abbruzzese, 59 Vice Chair, Senior Executive Director of Wealth Management since January 2022; Regional Managing Director - Washington, Oregon and Alaska of Wells Fargo from June 2009 to December 2021. Matthew K.M.
Prior experience includes several senior executive leadership roles in wealth management at Wells Fargo, Citigroup, and Chase Manhattan. At Wells Fargo, 8 Table of Contents Mr. Abbruzzese served as Regional Managing Director overseeing its Washington, Oregon, and Alaska wealth management markets - June 2009-December 2021. Matthew K.M.
Emerson, 47 Chief Retail Banking Officer since July 2024; Chief Strategy Officer since November 2023; Vice Chair since November 2022; Senior Executive Director of Mortgage Banking and Loans from February 2020 to November 2023; Senior Executive Vice President and Senior Executive Director of eCommerce from September 2018 to February 2020. Patrick M.
Emerson, 48 Vice Chair and Chief Retail Banking Officer - July 2024-present; Vice Chair and Chief Strategy Officer - November 2023-July 2024; Vice Chair - November 2022-present. Earlier roles include senior leadership in eCommerce/digital and consumer products at Bank of Hawai‘i. Patrick M.
Bradley Shairson, 55 Vice Chair and Chief Risk Officer since March 2024; Deputy Chief Risk Officer from May 2023 to March 2024; Chief Operating Officer and Chief Risk Officer of Regions Bank Capital Markets from March 2017 to April 2023. 8 Table of Contents
From March 2017 to April 2023, Chief Operating Officer and Chief Risk Officer of Regions Bank Capital Markets for Regions Bank (NYSE: RF). Mr. Shairson was also previously the Chief Operating Officer and Chief Risk Officer of Investment Banking at Mitsubishi UFJ Union Bank.
The Bank’s subsidiaries are engaged in securities brokerage, investment advisory services, and providing credit insurance. We are organized into three business segments for management reporting purposes: Consumer Banking, Commercial Banking, and Treasury and Other. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) and Note 13 in Item 8.
References to “we,” “our,” “us,” or “the Company” refer to the Parent and its subsidiaries and are consolidated for financial reporting purposes. We are organized into three business segments for management reporting purposes: Consumer Banking, Commercial Banking, and Treasury and Other. See Item 7.
Topics have included: Evaluating Employees and Meaningful Conversations to prepare our managers for the 2024 Performance, Merit & Bonus season, Rising Team, and how our leaders can continue to build stronger team dynamics. “Rising Team” continued to be a priority in 2024. This new and modern technology platform provides a way for us to strengthen our connection with our teammates.
This new and modern technology platform provides a way for us to strengthen our connection with our teammates.
Removed
References to “we,” “our,” “us,” or “the Company” refer to the Parent and its subsidiaries and are consolidated for financial reporting purposes. The Bank’s subsidiaries are identified in Exhibit 21.1 to this Form 10-K and include, among others, Bankoh Investment Services, Inc. and Pacific Century Life Insurance Corporation.
Added
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) and Note 12 in Item 8. “Notes to Consolidated Financial Statements” for more information.
Removed
The federal banking regulators regularly issue new guidance and standards, and update existing guidance and standards, regarding cybersecurity intended to enhance cyber risk management among financial institutions.
Added
The reduction in the special assessment was due to a decrease in the FDIC’s estimation of losses, as well as a downward adjustment made to the initially reported uninsured deposits balance as of December 31, 2022. The special assessment is being paid in eight quarterly installments, which began in June 2024.
Removed
Financial institutions are expected to comply with such guidance and standards and to accordingly develop appropriate security controls and risk management process. 2 Table of Contents In November 2021, the United States federal bank regulatory agencies adopted a rule regarding notification requirements for banking organizations related to significant computer security incidents.
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These include the Equal Credit Opportunity Act, the Truth-in-Lending Act, the Home Mortgage Disclosure Act and the Real Estate Settlement Procedures Act. Federal banking regulators, pursuant to the Gramm-Leach-Bliley Act, have enacted regulations limiting the ability of banks and other financial institutions to disclose nonpublic consumer information to non-affiliated third parties.
Removed
Under this rule, a bank holding company, such as Parent, and a national bank, such as the Bank, are required to notify the Federal Reserve of OCC, respectively, within 36 hours of incidents that have materially disrupted or degraded, or are reasonably likely to materially disrupt or degrade, the banking organization's ability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or pose a threat to the financial stability of the United States.
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Historically, the CFPB has exercised broad rule making authority for a wide range of consumer protection laws that apply to all providers of consumer products and services, including the Bank, as well as the authority to prohibit “unfair, deceptive or abusive” acts and practices.
Removed
Bankoh Investment Services, Inc., the broker-dealer and investment adviser subsidiary of the Bank, is incorporated in Hawaiʻi and is regulated by the SEC, the Financial Industry Regulatory Authority, and the DCCA’s Insurance Division.
Added
Additionally, under the Dodd-Frank Act, the CFPB has near-exclusive supervision authority, including examination authority, to assess compliance with federal consumer financial laws for a bank and its affiliates if the bank has total assets of more than $10 billion, which includes the Bank. With changes in priority of the new administration, the role of the CFPB is changing.
Removed
Unless an exemption applies, covered transactions by the Bank with a single affiliate are limited to 10% of the Bank’s capital and surplus, and with respect to all covered transactions with affiliates in the aggregate, they are limited to 20% of the Bank’s capital 4 Table of Contents and surplus.
Added
The CFPB has adopted a deregulatory approach, with the CFPB recently announcing that it plans to roll back certain rulemakings adopted over the last several years and will limit its supervision and examination activity. The U.S. Congress is also pursuing Congressional Review Act resolutions or otherwise taking steps to overturn certain recent CFPB rulemaking.
Removed
In general, the guidelines require appropriate systems and practices to identify and manage the risks and exposures specified in the guidelines before capital becomes impaired. 5 Table of Contents Community Reinvestment and Consumer Protection Laws ▪ Community Reinvestment.
Added
Nonetheless, the CFPB’s consumer protection laws and rules will continue to govern the Bank’s relationship with its customers unless and until they are changed. The timing and impact of any changes to the regulatory, enforcement, and supervisory priorities of the CFPB is not known at this time.
Removed
The Bank’s current CRA rating is “outstanding.” In October 2023, the U.S. banking agencies issued a final rule to amend their regulations implementing the CRA.
Added
In some cases, sessions led to referred candidates joining the Bank, and to current employees finding a new career path. Our Managers and Teams utilize Rising Team, a team development tool to build stronger team dynamics. “Rising Team” continued to be a priority in 2025.
Removed
The rule materially revises the current CRA framework, including the assessment areas in which a bank is evaluated to include activities associated with online and mobile banking, the tests used to evaluate the Bank in its assessment areas, new methods of calculating credit for lending, investment, and service activities, and additional data collection and reporting requirements.
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We also have customized to Bank of Hawaiʻi kits on our Leadership Principles, Employee Experience Principles and Operational Excellence. Employee Benefits: We believe in enabling a healthy workforce and providing a benefits program that is designed to attract, retain, and engage employees.
Removed
Most of the rule's provisions will become applicable on January 1, 2026. Reporting of the collected data will not be required until 2027. ▪ Consumer Protection Laws.
Added
Peter S. Ho will retire from the Company and the Bank effective March 31, 2026. The Board of Directors appointed James C. Polk to the position of President and Chief Executive Officer of the Company, effective April 1, 2026. Additionally, Lead Independent Director Raymond P. Vara, will become Non-Executive Chairman of the Board, effective April 1, 2026. Peter S.
Removed
The CFPB, along with other prudential regulators and the Department of Justice, have also expanded the focus of their regulatory examinations and investigations to include “fair and responsible banking.” Fair and responsible banking strives to provide equal credit opportunities to all applicants of a community, to prohibit discrimination by lenders on the basis of certain borrower characteristics, and to ensure that a bank’s practices are not deceptive, unfair, or take unreasonable advantage of consumers or businesses.
Added
Satenberg, 54 Vice Chair and Chief Financial Officer - July 2025-present; Deputy Chief Financial Officer - July 2024-June 2025. From March 2018 to June 2024, Senior Vice President and Chief Financial Officer at Luther Burbank Savings, a California chartered bank and subsidiary of Luther Burbank Corporation (NASDAQ: LBC).
Removed
“Manager Excellence Forums” continued in 7 Table of Contents 2024 as a platform connecting managers so that they can learn from and support one another when facing real management issues and discuss practical solutions.
Added
At the time of its acquisition, Luther Burbank Savings had approximately $8 billion in total assets and Mr. Satenberg oversaw all finance and accounting functions for the bank, as well as investor relations for its public company parent. Marco A. Abbruzzese, 60 Vice Chair and Senior Executive Director of Wealth Management - January 2022-present.
Removed
Manager engagement has been key to navigating the ever-changing business environment, and these forums help managers stay connected and improve their management skills while moving forward with their teams.
Added
Salmon, 55 Vice Chair and Chief Information and Operations Officer - April 2024-present; Senior Executive Vice President and Chief Information Officer - December 2020-April 2024. S. Bradley Shairson, 56 Vice Chair and Chief Risk Officer - March 2024-present; Vice Chair and Deputy Chief Risk Officer - May 2023-March 2024.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

46 edited+31 added−6 removed118 unchanged
Biggest changeIn addition, our communications and information systems and operations (including those of third parties that facilitate our business activities) could be damaged or interrupted due to events such as natural or human-caused disasters (including public health crises) or extreme weather (including as a result of climate change), geopolitical events and security issues, computer viruses, physical or electronic break-ins, operational failures, and similar events or disruptions.
Biggest changeIn addition, our communications and information systems and operations (including those of third parties that facilitate our business activities) could be damaged or interrupted due to events such as natural or human-caused disasters (including public health crises) or extreme weather (including as a result of climate change), geopolitical events and security issues, computer viruses, physical or electronic break-ins, operational failures, and similar events or disruptions. 15 Table of Contents Although we have safeguards and business continuity plans in place, our business operations may be adversely affected by significant and widespread disruption to our physical infrastructure or operating systems that support our business and our customers, resulting in financial losses, loss of customers, or damage to our reputation.
In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due us. Such losses could materially affect our financial condition or results of operations. We have experienced increases in FDIC insurance assessments.
In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due to us. Such losses could materially affect our financial condition or results of operations. We have experienced increases in FDIC insurance assessments.
A security breach or other significant disruption could: 1) disrupt the proper functioning of our networks and systems and therefore our operations and/or those of certain of our customers; 2) result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of confidential, sensitive or otherwise valuable information of ours or our customers, including account numbers and other financial and personal information; 3) result in a violation of applicable privacy, data breach and other laws, subjecting the Bank to additional regulatory scrutiny and exposing the Bank to civil litigation, governmental fines and possible financial liability; 4) require significant management attention and resources to remedy the damages that result; or 5) harm our reputation or cause a decrease in the number of customers that choose to do business with us or reduce the level of business that our customers do with us.
A security breach or other significant disruption could: 1) disrupt the proper functioning of our networks and systems and therefore our operations and/or those of certain of our customers; 2) result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of confidential, sensitive or otherwise valuable information of ours or our customers, including account numbers and other financial and personal information; 3) result in a violation of applicable privacy, data breach and other laws, subjecting the Bank to additional regulatory scrutiny and exposing the Bank to civil litigation, governmental fines and possible financial liability; 4) require significant management attention and resources to remedy the damages that result; or 5) harm our reputation or cause a decrease in the number of customers that choose to do business with us or reduce the level of business that our 16 Table of Contents customers do with us.
We continue to evaluate the potential impact that regulatory proposals may have on our liquidity and capital management strategies, including those required under the Dodd-Frank Act. The actual amount and timing of future dividends, if any, will depend on market and economic conditions, applicable SEC rules, federal and state regulatory and supervisory restrictions, and various other factors.
We continue to evaluate the potential impact that regulatory proposals may have on our liquidity and capital management strategies, including those required under the Dodd-Frank Act. The actual amount and timing of future dividends and share repurchases, if any, will depend on market and economic conditions, applicable SEC rules, federal and state regulatory and supervisory restrictions, and various other factors.
For the year ended December 31, 2024, the Company repurchased three residential mortgage loans with an aggregate unpaid principal balance totaling $1.1 million as a result of the representation and warranty provisions contained in these contracts. The loans were delinquent as to principal and interest at the time of repurchase, however, no material losses were incurred related to these repurchases.
For the year ended December 31, 2025, the Company repurchased three residential mortgage loans with an aggregate unpaid principal balance totaling $1.1 million as a result of the representation and warranty provisions contained in these contracts. The loans were delinquent as to principal and interest at the time of repurchase, however, no material losses were incurred related to these repurchases.
As servicer, the Company’s primary duties are to: (1) collect payments due from borrowers; (2) advance certain delinquent payments of principal and interest; (3) maintain and administer any hazard, title, or primary mortgage insurance policies relating to the mortgage loans; (4) maintain any required escrow accounts for payment of taxes and insurance and administer escrow payments; and (5) foreclose on defaulted mortgage loans or, to the extent consistent with the documents governing a securitization, consider alternatives to foreclosure, such as loan modifications or short sales.
As servicer, the Company’s primary duties are to: (1) collect payments due from borrowers; (2) advance certain delinquent payments of principal and interest; (3) maintain and administer any hazard, title, or primary mortgage insurance policies relating to the mortgage loans; (4) maintain any required escrow accounts for payment of taxes and insurance and 17 Table of Contents administer escrow payments; and (5) foreclose on defaulted mortgage loans or, to the extent consistent with the documents governing a securitization, consider alternatives to foreclosure, such as loan modifications or short sales.
However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters may be material to our financial results for any particular period. See Note 20 in Item 8. “Notes to the Consolidated Financial Statements” under the discussion related to Contingencies for more information.
However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters may be material to our financial results for any particular period. See Note 19 in Item 8. “Notes to the Consolidated Financial Statements” under the discussion related to Contingencies for more information.
In addition, if one or more financial institutions are found to have violated a law or regulation relating to certain business activities, this could lead to investigations by regulators or other governmental agencies of the same or similar activities by other financial institutions, including the Company, 17 Table of Contents and large fines and remedial measures that may have been imposed in resolving earlier investigations for the same or similar activities at other financial institutions may be used as the basis for future settlements.
In addition, if one or more financial institutions are found to have violated a law or regulation relating to certain business activities, this could lead to investigations by regulators or other governmental agencies of the same or similar activities by other financial institutions, including the Company, and large fines and remedial measures that may have been imposed in resolving earlier investigations for the same or similar activities at other financial institutions may be used as the basis for future settlements.
Item 1A. Ri sk Factors There are a number of risks and uncertainties, including those material risk factors described below, that could negatively affect our business, financial condition, results of operations, liquidity and the trading price of our common stock.
Item 1A. Risk Factors There are a number of risks and uncertainties, including those material risk factors described below, that could negatively affect our business, financial condition, results of operations, liquidity and the trading price of our common stock.
There is no assurance that those actions will not result in regulatory settlements or other enforcement actions against the Company or the Bank. Furthermore, a single event involving a potential violation of law or regulation may give rise to numerous and overlapping investigations and proceedings by multiple federal and state agencies and officials.
There is no assurance that those actions will not result in regulatory settlements or other enforcement actions against the Company or the Bank. Furthermore, a single event involving a potential violation of law or regulation may give rise to numerous and overlapping investigations and proceedings by multiple federal and state agencies and 19 Table of Contents officials.
Changes in the capital markets could affect the volume of income from and demand for our fee-based services. Our investment management revenues depend in large part on the level of assets under management.
Changes in the capital markets could materially affect the level of assets under management and the demand for our other fee-based services. Changes in the capital markets could affect the volume of income from and demand for our fee-based services. Our investment management revenues depend in large part on the level of assets under management.
A reduction in or elimination of our dividend payments could have a negative effect on our stock price. Risks Related to Regulatory Changes Fiscal and monetary policy changes may significantly impact our profitability and liquidity. The Company’s business and earnings are significantly affected by the fiscal and monetary policies of the Federal Government and its agencies.
A reduction in or elimination of our dividend payments could have a negative effect on our stock price. 13 Table of Contents Risks Related to Regulatory Changes Fiscal and monetary policy changes may significantly impact our profitability and liquidity. The Company’s business and earnings are significantly affected by the fiscal and monetary policies of the Federal Government and its agencies.
Upon receipt of a 15 Table of Contents repurchase request, the Company works with investors or insurers to arrive at a mutually agreeable resolution. Repurchase demands are typically reviewed on an individual loan by loan basis to validate the claims made by the investor or insurer and to determine if a contractually required repurchase event has occurred.
Upon receipt of a repurchase request, the Company works with investors or insurers to arrive at a mutually agreeable resolution. Repurchase demands are typically reviewed on an individual loan by loan basis to validate the claims made by the investor or insurer and to determine if a contractually required repurchase event has occurred.
Economic and inflationary pressure on consumers and uncertainty regarding the economic 9 Table of Contents environment could result in changes in consumer and commercial spending, borrowing and savings habits. Such conditions could have a material adverse effect on the credit quality of our loans and our business, financial condition and results of operations.
Economic and inflationary pressure on consumers and uncertainty regarding the economic environment could result in changes in consumer and commercial spending, borrowing and savings habits. Such conditions could have a material adverse effect on the credit quality of our loans and our business, financial condition and results of operations.
In light of several recent high-profile data breaches involving other companies’ losses of customer personal and financial information, a material cybersecurity incident could cause customer and/or Bank losses, damage to our brand, and increase our costs through the 14 Table of Contents ongoing cost of technology investments to improve security, as well as the potential financial and reputational impact of a cyber security incident involving the Company.
In light of several high-profile data breaches involving other companies’ losses of customer personal and financial information, a material cybersecurity incident could cause customer and/or Bank losses, damage to our brand, and increase our costs through the ongoing cost of technology investments to improve security, as well as the potential financial and reputational impact of a cyber security incident involving the Company.
Cuts in defense and other security spending in the State of Hawaiʻi could have an adverse impact on the economies in which we operate, which could adversely affect our business, financial condition, and results of operations. Changes in interest rates could adversely impact our results of operations and capital.
Cuts in defense and other security spending in the State of Hawaiʻi could have an adverse impact on the economies in which we operate, which could adversely affect our business, financial condition, and results of operations. 11 Table of Contents Changes in interest rates could adversely impact our results of operations and capital.
In addition, there may be increased regulatory scrutiny in the course of routine examinations and otherwise, and new regulations designed to respond to recent negative developments in the banking industry, all of which may increase our costs of doing business and reduce our profitability.
In addition, there may be increased regulatory scrutiny in the course of routine examinations and otherwise, and new regulations designed to respond to recent negative developments in the banking industry, all of which may increase our 14 Table of Contents costs of doing business and reduce our profitability.
Our business operations could suffer to the extent the Bank cannot utilize its branch network due to damage from weather or other natural disasters. 16 Table of Contents Real estate is also utilized as collateral for many of our loans.
Our business operations could suffer to the extent the Bank cannot utilize its branch network due to damage from weather or other natural disasters. Real estate is also utilized as collateral for many of our loans.
Our allowance for credit losses may prove to be insufficient to absorb losses or appropriately reflect, at any given time, the inherent risk of loss in our loan portfolio. Our non-performing assets were at $19.3 million, or 0.14%, of total loans and leases and foreclosed real estate at December 31, 2024.
Our allowance for credit losses may prove to be insufficient to absorb losses or appropriately reflect, at any given time, the inherent risk of loss in our loan portfolio. Our non-performing assets were at $14.2 million, or 0.10%, of total loans and leases and foreclosed real estate at December 31, 2025.
A prolonged period of inflation or other period of high cost of goods such as a result of tariffs given that Hawaiʻi imports certain goods from Mexico, Canada and other countries that may become subject to tariffs, may impact our profitability by negatively impacting our costs and expenses.
A prolonged period of inflation or other period of high cost of goods such as a result of tariffs given that Hawaiʻi imports certain goods from Mexico, Canada and other countries that may become subject to tariffs, may impact our profitability.
Our estimates of the risk of loss and amount of loss on any loan are complicated by the significant uncertainties surrounding our borrowers responses to changing business and economic conditions, interest rate environments, inflation and other factors.
Our estimates of the risk of loss and amount of loss on any loan are complicated by the significant uncertainties surrounding our 12 Table of Contents borrowers’ responses to changing business and economic conditions, interest rate environments, inflation and other factors.
As of December 31, 2024, the unpaid principal balance of residential mortgage loans sold and serviced by the Company was $2.0 billion. The agreements under which the Company sells residential mortgage loans require delivery of various documents to the investor or its document custodian.
As of December 31, 2025, the unpaid principal balance of residential mortgage loans sold and serviced by the Company was $1.8 billion. The agreements under which the Company sells residential mortgage loans require delivery of various documents to the investor or its document custodian.
These events may also result in potentially adverse changes to laws or regulations governing banks and bank holding companies or result in the impositions of restrictions through supervisory or enforcement activities, including higher capital requirements, which could have a material impact on our business.
Disruptions and failures in the banking industry may also result in potentially adverse changes to laws or regulations governing banks and bank holding companies or result in the imposition of restrictions through supervisory or enforcement activities, including higher capital requirements, which could have a material impact on our business.
Our future performance will depend on our ability to respond timely to technological change. The financial services industry is likely to become more competitive as further technological advances enable more companies, including non-depository institutions, to provide financial services. Also, some of our competitors, through delivery channels such as the Internet, may be based outside of the markets that we serve.
The financial services industry is likely to become more competitive as further technological advances enable more companies, including non-depository institutions, to provide financial services. Also, some of our competitors, through delivery channels such as the Internet, may be based outside of the markets that we serve.
As of December 31, 2024, we serviced an aggregate unpaid principal balance of approximately $2.5 billion.
As of December 31, 2025, we serviced an aggregate unpaid principal balance of approximately $2.4 billion.
Our loan portfolio is largely secured by real estate, and a downturn in the real estate market may adversely affect our results of operations. Our loan portfolio is largely secured by real estate, with a particular concentration of real estate located in Hawaiʻi and the West Pacific.
Our loan portfolio is largely secured by real estate, with a particular concentration of real estate located in Hawaiʻi and the West Pacific.
At the same time, for secured loans, the marketability of the underlying collateral may be adversely affected by higher interest rates. In a declining interest rate environment, there is likely to be an increase in prepayment activity on loans as the borrowers refinance their loans at lower interest rates. Under these circumstances, our results of operations could be negatively impacted.
In a declining interest rate environment, there is likely to be an increase in prepayment activity on loans as the borrowers refinance their loans at lower interest rates. Under these circumstances, our results of operations could be negatively impacted.
Our criticized loans were $296.2 million, or 2.10%, of total loans and leases at December 31, 2024. The risk of nonpayment on loans and leases is inherent in all lending activities and, like all financial institutions, we maintain an allowance for credit losses to provide for loans in our portfolio that may not be repaid in their entirety.
The risk of nonpayment on loans and leases is inherent in all lending activities, and, like all financial institutions, we maintain an allowance for credit losses to provide for loans in our portfolio that may not be repaid in their entirety.
Delays in the foreclosure process also could increase the amount of servicing advances that we are required to make, lengthen the time it takes for us to be reimbursed for such advances, and increase the costs incurred during the foreclosure process, which in turn could affect our financial condition or results of operations. 11 Table of Contents Changes in the capital markets could materially affect the level of assets under management and the demand for our other fee-based services.
Delays in the foreclosure process also could increase the amount of servicing advances that we are required to make, lengthen the time it takes for us to be reimbursed for such advances, and increase the costs incurred during the foreclosure process, which in turn could affect our financial condition or results of operations.
“Business – Supervision and Regulation” of this Annual Report on Form 10-K for information regarding regulation affecting the Company. 12 Table of Contents The Dodd-Frank Act, other consumer protection laws, and their implementing rules and regulations are likely to continue to result in increased compliance costs, along with possible restrictions on our products, services and manner of operations, any of which may have a material adverse effect on our results of operations and financial condition.
The Dodd-Frank Act, other consumer protection laws, and their implementing rules and regulations are likely to continue to result in increased compliance costs, along with possible restrictions on our products, services and manner of operations, any of which may have a material adverse effect on our results of operations and financial condition.
Some of our competitors are not subject to the same level of regulation and oversight that is required of banks and BHCs, and may benefit from tax exemptions or lower tax rates. As a result, some of these competitors may have lower cost structures. We expect competitive conditions to intensify as consolidation in the financial services industry continues.
Some of our competitors are not subject to the same level of regulation and oversight that is required of banks 18 Table of Contents and BHCs, and may benefit from tax exemptions or lower tax rates. As a result, some of these competitors may have lower cost structures.
Events impacting the financial services industry, such as the 2023 failures of Silicon Valley Bank, Signature Bank and First Republic Bank, have resulted in decreased confidence in banks among uninsured consumer and commercial depositors, other counterparties and investors, as well as significant disruption, volatility and reduced valuations of equity and other securities of banks in the capital markets.
Events impacting the financial services industry may result in decreased confidence in banks among uninsured consumer and commercial depositors, other counterparties and investors, as well as significant disruption, volatility and reduced valuations of equity and other securities of banks in the capital markets.
Deterioration of business and economic conditions, particularly in Hawaiʻi and the West Pacific, has in the past adversely affected, and in the future could adversely affect the quality of our assets, credit losses, and the demand for our products and services, which could lead to lower revenues, higher expenses, and lower earnings.
Deterioration of business and economic conditions, particularly in Hawaiʻi and the West Pacific, has in the past adversely affected, and in the future could adversely affect the quality of our assets, credit losses, and the demand for our products and services, which could lead to lower revenues, higher expenses, and lower earnings. 9 Table of Contents Our loan portfolio is largely secured by real estate, and a downturn in the real estate market may adversely affect our results of operations.
Further increases in our assessment fees may have an adverse effect on our results of operations and financial condition. Item 1B. Unresolv ed Staff Comments None.
We may also experience increases in our base assessments depending on increases in our assessment base or assessment rate. Further increases in our assessment fees may have an adverse effect on our results of operations and financial condition. Item 1B. Unresolved Staff Comments None.
As of December 31, 2024, our residential mortgage loans represented $4.6 billion, or 32.9%, of our total loan and lease portfolio and our commercial mortgage loans represented approximately $4.0 billion, or 28.6%, of our total loan and lease portfolio.
As of December 31, 2025, our residential mortgage loans represented $4.8 billion, or 33.9%, of our total loan and lease portfolio and our commercial mortgage loans represented approximately $4.2 billion, or 29.9%, of our total loan and lease portfolio.
If we are unable to continue to fund loans and other assets through customer deposits or access capital markets on favorable terms or if we otherwise fail to manage our liquidity effectively, our liquidity, net interest margin, financial results and condition may be adversely affected. 10 Table of Contents Fixed rate loans increase our exposure to interest rate risk in a rising rate environment because interest-bearing liabilities would be subject to repricing before assets become subject to repricing.
If we are unable to continue to fund loans and other assets through customer deposits or access capital markets on favorable terms or if we otherwise fail to manage our liquidity effectively, our liquidity, net interest margin, financial results and condition may be adversely affected.
Although we do not anticipate the new corporate minimum income tax will currently apply to us, changes in our business and any future regulations or other guidance on the interpretation and application of the new corporate minimum tax, as well as the potential application of the share repurchase excise tax, may result in additional taxes payable by us, which could materially and adversely affect our 13 Table of Contents financial results and operations.
Although we have evaluated the impact of the OBBBA and do not expect any material changes to our effective tax rate or results of operations, changes in our business and any future regulations or other guidance on the interpretation and application of the new corporate tax rules, may result in additional taxes payable by us, which could materially and adversely affect our financial results and operations.
The CFPB has exercised its broad rule-making, supervisory, and examination authority of consumer financial products, as well as expanded data collection and enforcement powers, over depository institutions with more than $10.0 billion in assets. Regulation of overall safety and soundness, the CRA, federal housing and flood insurance, as they pertain to consumer financial products and services, remains with the FRB.
Historically, the CFPB has exercised its broad rulemaking, supervisory, and examination authority of consumer financial products, as well as expanded data collection and enforcement powers, over depository institutions with more than $10.0 billion in assets, like the Bank.
These events occurred during a period of rapidly rising interest rates which, among other things, resulted in unrealized losses in longer duration securities and loans held by banks, and more competition for bank deposits. These events have, and could continue to, adversely impact the market price and volatility of the Company’s common stock.
During a period of rapidly rising interest rates which, among other things, may result in unrealized losses in longer duration securities and loans held by banks, and more competition for bank deposits.
Our dividend payments may change from time-to-time, and we cannot provide assurance that we will continue to declare dividends in any particular amounts or at all. Dividends on our common stock are subject to capital availability and periodic determinations by our Board of Directors.
In January 2026, the Parent’s Board of Directors declared a quarterly cash dividend of $0.70 per share on the Parent’s outstanding common shares. Our dividend payments and/or stock repurchases may change from time to time, and we cannot provide assurance that we will continue to declare dividends and/or repurchase stock in any particular amounts or at all.
As a result of greater regulatory scrutiny of consumer financial products as a whole, the Company has become subject to more and expanded regulatory examinations, which also could result in increased costs as well as harm to our reputation in the event of a finding that we have not complied with the increased regulatory requirements.
Increased regulatory examinations or enforcement actions by regulators may result in increased costs as well as harm to our reputation in the event of a finding that we have not complied with the increased regulatory requirements.
Both federal and local laws provide mechanisms for out-of-state banks and their holding companies to acquire or open branches in our service territories. Failure to effectively address this competitive risk by competing, innovating and making effective use of new and existing channels to deliver our products and services could adversely affect our financial condition or results of operations.
Failure to effectively address this competitive risk by competing, innovating and making effective use of new and existing channels to deliver our products and services could adversely affect our financial condition or results of operations. Our future performance will depend on our ability to respond timely to technological change.
Additionally, financial markets may be adversely affected by the current or anticipated impact of military conflict, terrorism or other geopolitical events.
The level of domestic and international visitor arrivals and spending, housing prices, real estate values, and unemployment rates are some of the metrics that we regularly monitor. Additionally, financial markets may be adversely affected by the current or anticipated impact of military conflict, terrorism or other geopolitical events.
There can be no assurance that the Parent will continue to declare cash dividends. The Parent paid cash dividends of $112.3 million on common shares during 2024. In January 2025, the Parent’s Board of Directors declared a quarterly cash dividend of $0.70 per share on the Parent’s outstanding common shares.
There can be no assurance that the Parent will continue to declare cash dividends. During 2025, the Parent repurchased 76,547 shares of common stock at a total cost of 5.0 million under its share repurchase program. The Parent also paid cash dividends of $113.0 million on common shares during 2025.
Adjustable rate loans decrease the risks to a lender associated with changes in interest rates but involve other risks. As interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, and the increased payment increases the potential for default.
As interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, and the increased payment increases the potential for default. At the same time, for secured loans, the marketability of the underlying collateral may be adversely affected by higher interest rates.
The assessment was based on reported uninsured deposits as of December 31, 2022. The Company's share of the FDIC special assessment was approximately $16.6 million. We may also experience increases in our base assessments depending on increases in our assessment base or assessment rate.
The assessment was based on reported uninsured deposits as of December 31, 2022. At December 31, 2025, the Company’s share of the FDIC special assessment was approximately $11.8 million and reflects adjustments to the initial assessment based on the FDIC’s updated estimate of losses, as well as revisions to our reported uninsured deposit balances.
Removed
The level of domestic and international visitor arrivals and spending, housing prices, real estate values, and unemployment rates are some of the metrics that we regularly monitor. We are also continuing to monitor Maui's recovery from the August 2023 wildfire.
Added
Significant changes to the size, structure, powers and operations of the federal government, changes to U.S. economic policies, the effects of any prolonged shutdown of the federal government, and uncertainties regarding the potential for these changes may cause economic disruptions that could, in turn, adversely impact our business, results of operations and financial condition.
Removed
For example, the Inflation Reduction Act was enacted on August 16, 2022, and introduced, among provisions, a new corporate minimum income tax on certain large corporations, an excise tax of 1% on certain share repurchases by corporations, and increased funding for the Internal Revenue Service.
Added
The current U.S. administration has implemented significant changes in federal priorities and has taken steps to change the operations, structure, and policy focus of various federal agencies, as well as regulatory priorities, policy approaches and interpretations of existing laws by those federal agencies.
Removed
Although we have safeguards and business continuity plans in place, our business operations may be adversely affected by significant and widespread disruption to our physical infrastructure or operating systems that support our business and our customers, resulting in financial losses, loss of customers, or damage to our reputation.
Added
For example, recent executive actions and proposed legislation have changed agency mandates, modified or reduced federal program funding, altered regulatory frameworks, or adjusted the size and composition of the federal workforce. Moreover, leadership transitions at key federal agencies have impacted or may impact rulemaking, supervision, enforcement, and examination priorities across the financial regulatory landscape.
Removed
In August 2023, wildfires broke out in West Maui destroying the historic town of Lahaina as well as structures and farmland in Upcountry Maui and North Kihei. Roughly 2,200 structures were lost in the fire, 85% of which were homes.
Added
These developments in the federal government may have varying effects on the banking and financial services industry that are difficult to predict, which makes it difficult for us to anticipate and mitigate attendant risks.
Removed
Though the economic recovery has been faster than anticipated, Maui's visitor industry remains depressed as the Maui economy continues its gradual post-wildfire recovery.
Added
Compliance with changing federal and regulatory priorities could, among other things, increase the costs of operating our business, reduce the demand for our products and services, impact our ability to achieve our business goals, and increase our legal, operational and reputational risks, any or all of which could materially adversely affect our results of operations.
Removed
While loans to our customers impacted by the Maui wildfires were not material to our total loan portfolio, real estate property values in the wildfire area were negatively affected and continue to be negatively affected during the wild-fire recovery period. General Risk Factors Competition may adversely affect our business. Our future depends on our ability to compete effectively.
Added
The current U.S. administration has also implemented rapid shifts in macroeconomic policies, such as those relating to trade restrictions and tariffs, which have created significant uncertainties regarding U.S. economic growth, the potential for recession, and concerns over an increase in inflation.
Added
In particular, these economic policies have created significant instability in the trade relationship between the U.S. and Chinese economies, including tariff escalation, scrutiny of U.S. investment into Chinese companies, and potential limits on Chinese companies’ access to U.S. markets.
Added
In order to limit the impact of unpredictable U.S. actions, global companies and governments may reduce the use of the U.S. dollar in world trade and financial transactions, which could result in further volatility in the financial markets and U.S. economy.
Added
Slow economic growth, economic contraction or recession, or shifts in broader consumer and business trends in Hawaiʻi and the Pacific Islands would significantly impact our ability to originate loans, the ability of borrowers to repay loans, and the value of the collateral securing loans.
Added
Other political and economic events within the United States, including a contentious domestic political environment, changes in or disagreements over U.S. monetary policy and actions of the Federal Reserve, disagreements over long-term federal budget and deficit reduction plans, a U.S. government shutdown, disagreements over, or threats not to increase, the U.S. government’s borrowing limit (or “debt ceiling”), and risk of further downgrade of the ratings of U.S. government debt obligations, also may negatively impact financial markets and the U.S. economy, including the economy of Hawaiʻi and the Pacific Islands.
Added
For example, from October 1 to November 12, 2025, the federal government of the United States was shut down as Congress failed to pass appropriations legislation for the 2026 fiscal year and this shutdown added strain to the economic environment in Hawaiʻi.
Added
Future disagreements over the U.S. federal budget and appropriations may cause the U.S. federal government to shut down in the future.
Added
Further, the perception of the potential for additional, significant changes in federal regulatory or economic policy also has increased uncertainty and may exacerbate declines in investor and consumer confidence, which in turn may adversely 10 Table of Contents impact financial markets and the broader economy of the U.S. and the economy of Hawaiʻi and the Pacific Islands in particular, perhaps suddenly and to a significant degree.
Added
Regional business and economic conditions are a major driver of our results of operations. Difficult conditions in the regional business and economic environment, including those caused by the lack of stability and predictability of U.S. policymaking, may materially adversely affect our operating expenses, the quality of our assets, credit losses, and the demand for our products and services.
Added
Fixed rate loans increase our exposure to interest rate risk in a rising rate environment because interest-bearing liabilities would be subject to repricing before assets become subject to repricing. Adjustable-rate loans decrease the risks to a lender associated with changes in interest rates but involve other risks.
Added
Dividends on our common stock and/or stock repurchases are subject to capital availability and periodic determinations by our Board of Directors.
Added
“Business – Supervision and Regulation” of this Annual Report on Form 10-K for information regarding regulation affecting the Company.
Added
Regulation of overall safety and soundness, the CRA, federal housing and flood insurance, as they pertain to consumer financial products and services, remains with the FRB. With changes in priority of the new administration, the role of the CFPB is changing.
Added
Nonetheless, the CFPB’s consumer protection laws and rules will continue to govern the Bank’s relationship with its customers unless and until they are changed. In times of greater regulatory scrutiny of consumer financial products as a whole, the Company has become subject to more and expanded regulatory examinations.
Added
For example, the One Big Beautiful Bill Act (“OBBBA”) was enacted on July 4, 2025, permanently extending several tax provisions originally introduced under the 2017 Tax Cuts and Jobs Act that were set to expire at the end of 2025. The OBBBA also introduced changes to certain U.S. corporate tax rules, most of which take effect in 2026.
Added
General Risk Factors Competition may adversely affect our business. Our future depends on our ability to compete effectively.
Added
We expect competitive conditions to intensify as consolidation in the financial services industry continues. Both federal and local laws provide mechanisms for out-of-state banks and their holding companies to acquire or open branches in our service territories.
Added
The development and use of AI present risks and challenges that may adversely impact our business. We and/or our third-party vendors, clients or counterparties have in the past developed or incorporated, and may in the future develop or incorporate AI technology in certain business processes, services or products.
Added
The development and use of AI present a number of risks and challenges to our business.
Added
The legal and regulatory environment relating to AI is uncertain and rapidly evolving, both in the U.S. and internationally, and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment and other laws applicable to the use of AI.
Added
These evolving laws, regulations and court decisions could require changes in our implementation of AI technology and increase our compliance costs and the risk of non-compliance.
Added
AI models, particularly generative AI models, may produce output or take action that is incorrect or inaccurate, that result in the release of private, confidential or proprietary information, that reflect biases included in the data on which they are trained, infringe on the intellectual property rights of others, or that otherwise exposes the Company to harm.
Added
In addition, the complexity of many AI models makes it challenging to understand why they are generating particular outputs.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe also strive to negotiate appropriate cybersecurity provisions in our vendor contracts. For the 2024 period, we reported no material cybersecurity incidents affecting the confidentiality, integrity, or availability of data or systems.
Biggest changeWe also strive to negotiate appropriate cybersecurity provisions in our vendor contracts. 21 Table of Contents For the 2025 period, we reported no material cybersecurity incidents affecting the confidentiality, integrity, or availability of data or systems.
One of the key aspects of this program is a risk assessment that is used to identify industry and company-specific risks, measure control 18 Table of Contents effectiveness, identify any gaps that need to be addressed, and linking our controls with applicable policies, standards and guidelines to ensure that responsible parties are aware of their obligations with respect to this program.
One of the key aspects of this program is a risk assessment that is used to identify industry and company-specific risks, measure control effectiveness, identify any gaps that need to be addressed, and linking our controls with applicable policies, standards and guidelines to ensure that responsible parties are aware of their obligations with respect to this program.
Item 1C. Cybersecurit y As a company that collects and retains large volumes of customer and employee data, including payment card numbers and other personally identifiable information, we face significant and persistent cybersecurity risks.
Item 1C. Cybersecurity As a company that collects and retains large volumes of customer and employee data, including payment card numbers and other personally identifiable information, we face significant and persistent cybersecurity risks.
Governanc e The Board of Directors holds ultimate responsibility for overseeing cybersecurity and information security risks. They dedicate substantial time and attention to this critical area, leveraging the technical expertise of their members. The Board regularly reviews an Enterprise-Wide Risk Report, which includes key cybersecurity risk measures and trends across the Company.
Governance The Board of Directors holds ultimate responsibility for overseeing cybersecurity and information security risks. They dedicate substantial time and attention to this critical area, leveraging the technical expertise of their members. The Board regularly reviews an Enterprise-Wide Risk Report, which includes key cybersecurity risk measures and trends across the Company.
We face certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. For furth er information, see Item 1A.
We face certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. For further information, see Item 1A.
The protection and integrity of that data is important to us, which is demonstrated by the significant efforts and investments made to implement various measures to manage the risk of a security breach or disruption.
The protection and integrity 20 Table of Contents of that data is important to us, which is demonstrated by the significant efforts and investments made to implement various measures to manage the risk of a security breach or disruption.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAdditional information with respect to premises and equipment is presented in Notes 6 and 23 in Item 8. “Notes to Consolidated Financial Statements.” 19 Table of Contents
Biggest changeAdditional information with respect to premises and equipment is presented in Note 5 and Note 22 in Item 8. “Notes to Consolidated Financial Statements.”
Item 2. P roperties Our principal offices are located in the Financial Plaza of the Pacific in Honolulu, Hawaiʻi. We own and lease other branch offices and operating facilities located throughout Hawaiʻi and the West Pacific. We believe our current facilities are adequate to meet our needs.
Item 2. Properties Our principal office is a leased facility located in the Financial Plaza of the Pacific in Honolulu, Hawaiʻi. We own and lease other branch offices and operating facilities located throughout Hawaiʻi and the West Pacific. We believe our current facilities are adequate to meet our needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor additional information, see Note 20 in Item 8. “Notes to Consolidated Financial Statements,” under the discussion related to Contingencies. Item 4. Mine Sa fety Disclosures Not Applicable. Part II
Biggest changeFor additional information, see Note 19 in Item 8. “Notes to Consolidated Financial Statements,” under the discussion related to Contingencies. Item 4. Mine Safety Disclosures Not Applicable. 22 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe Company has included the S&P Supercomposite Regional Bank Index to the graph because the companies in this index are the ones with which the Company competes for capital and talent. The graph assumes that $100 was invested on December 31, 2019, in the Parent’s common stock, the S&P 500 Index, and the S&P Supercomposite Regional Bank Index.
Biggest changeThe graph assumes that $100 was invested on December 31, 2020, in the Parent’s common stock, the S&P 500 Index, KBW Regional Banking Index, and the S&P Supercomposite Regional Bank Index.
“Business – Supervision and Regulation, Dividend Restrictions” of this report and Note 11 in Item 8. “Notes to Consolidated Financial Statements” for more information. Issuer Purchases of Equity Securities During the fourth quarter ended December 31, 2024, there were no purchases of our common stock made by the Parent under our previously announced share repurchase program.
“Business – Supervision and Regulation, Dividend Restrictions” of this report and Note 10 in Item 8. “Notes to Consolidated Financial Statements” for more information. Issuer Purchases of Equity Securities During the fourth quarter ended December 31, 2025, there were no purchases of our common stock made by the Parent under our previously announced share repurchase program.
The Parent’s Board of Directors considers on a quarterly basis the advisability of paying a cash dividend to its shareholders and the level and advisability of repurchasing shares of the Parent’s common stock. Under the Parent’s historical practice, dividends declared on common stock are paid within the quarter. See Item 1.
The Parent’s Board of Directors considers on a quarterly basis the advisability of paying a cash dividend to its shareholders and the level and advisability of repurchasing shares of the Parent’s common stock. Under the Parent’s historical practice, dividends declared on common stock are paid within the quarter.
The share repurchase program was first announced in July 2001 with an initial authorization to repurchase $70 million in shares of common stock. The Board increased the share repurchase program, most recently in January 2019 by $130 million. The share repurchase program has no set expiration or termination date.
The share repurchase program was first announced in July 2001 with an initial authorization to repurchase $70 million in shares of common stock. The Board increased the share repurchase program, most recently in January 2023 by $100 million. The share repurchase program has no set expiration or termination date.
During the fourth quarter of 2024, 2,583 shares were acquired from employees in connection with income tax withholdings related to the vesting of restricted stock. The shares were purchased at the closing price of the Parent’s common stock on the dates of purchase. 2.
During the fourth quarter of 2025, 608 shares were acquired from employees in connection with income tax withholdings related to the vesting of restricted stock. The shares were purchased at the closing price of the Parent’s common stock on the dates of purchase. 2.
Item 5. Market for Registrant’s Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities The common stock of the Parent is traded on the New York Stock Exchange (NYSE Symbol: BOH) and quoted daily in leading financial publications. As of February 13, 2025, there were 4,930 common shareholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The common stock of the Parent is traded on the New York Stock Exchange (NYSE Symbol: BOH) and quoted daily in leading financial publications. As of February 13, 2026, there were 4,696 common shareholders of record.
The repurchases in the fourth quarter ended December 31, 2024, consisted of the following: Period Total Number of Shares Purchased 1 Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 2 October 1 - 31, 2024 2,190 $ 64.92 — $ 126,038,927 November 1 - 30, 2024 393 77.07 — 126,038,927 December 1 - 31, 2024 — — — 126,038,927 Total 2,583 $ 66.77 — 1.
The repurchases in the fourth quarter ended December 31, 2025, consisted of the following: Period Total Number of Shares Purchased 1 Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 2 October 1 - 31, 2025 608 $ 61.74 — $ 125,992,970 November 1 - 30, 2025 76,547 65.33 76,547 120,991,859 December 1 - 31, 2025 — — — 120,991,859 Total 77,155 $ 65.31 76,547 1.
The actual amount and timing of future share repurchases, if any, will depend on market and economic conditions, regulatory rules, applicable SEC rules, and various other factors. 20 Table of Contents Performance Graph The following graph shows the cumulative total return for the Parent’s common stock compared to the cumulative total returns for the Standard & Poor's (“S&P”) 500 Index, and the S&P Supercomposite Regional Bank Index.
Performance Graph The following graph shows the cumulative total return for the Parent’s common stock compared to the cumulative total returns for the Standard & Poor’s (“S&P”) 500 Index, KBW Regional Banking Index, and the S&P Supercomposite Regional Bank Index.
The cumulative total return on each investment is as of December 31 of each of the subsequent five years and assumes reinvestment of dividends. 2019 2020 2021 2022 2023 2024 Bank of Hawaii Corporation $ 100 $ 84 $ 95 $ 91 $ 89 $ 92 S&P 500 Index $ 100 $ 118 $ 152 $ 125 $ 158 $ 197 S&P Supercomposite Regional Bank Index $ 100 $ 93 $ 131 $ 107 $ 94 $ 114 Item 6.
The cumulative total return on each investment is as of December 31 for each of the subsequent five years and assumes reinvestment of dividends. 23 Table of Contents 2020 2021 2022 2023 2024 2025 Bank of Hawaii Corporation $ 100 $ 113 $ 108 $ 106 $ 109 $ 109 S&P 500 $ 100 $ 129 $ 105 $ 133 $ 166 $ 196 KBW Regional Banking Index $ 100 $ 137 $ 127 $ 127 $ 143 $ 153 S&P Supercomposite Regional Bank Index $ 100 $ 140 $ 115 $ 101 $ 122 $ 135 Item 6.
Added
We are not permitted to pay dividends to holders of our common stock if we have not paid or provided for the dividends, if any, fixed with respect to any outstanding shares of Series A Preferred Stock, Series B Preferred Stock, and other preferred stock, if any. See Item 1.
Added
The actual amount and timing of future share repurchases, if any, will depend on market and economic conditions, regulatory rules, applicable SEC rules, and various other factors.
Added
The Company has added the KBW Regional Banking Index to the graph because the companies in this index are the ones with which the Company competes for capital and talent.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAverage Balances and Interest Rates – Taxable-Equivalent Basis 1 Table 1 2024 2023 (dollars in millions) Average Balance Income/ Expense 2 Yield/ Rate Average Balance Income/ Expense Yield/ Rate Earning Assets Cash and Cash Equivalents $ 594.1 $ 30.7 5.17 % $ 543.9 $ 28.4 5.22 % Investment Securities Available-for-Sale Taxable 2,433.8 89.3 3.67 2,631.0 93.4 3.55 Non-Taxable 9.2 0.6 6.05 6.1 0.2 4.06 Held-to-Maturity Taxable 4,783.5 84.9 1.78 5,173.9 92.2 1.78 Non-Taxable 34.5 0.7 2.10 35.1 0.7 2.10 Total Investment Securities 7,261.0 175.5 2.42 7,846.1 186.5 2.38 Loans Held for Sale 2.9 0.2 6.05 3.0 0.2 6.16 Loans and Leases 3 Commercial Mortgage 3,763.6 205.9 5.47 3,776.2 197.0 5.22 Commercial and Industrial 1,679.8 89.2 5.31 1,511.2 74.2 4.91 Construction 333.4 25.6 7.66 262.1 16.0 6.09 Commercial Lease Financing 65.1 1.7 2.68 63.7 0.8 1.30 Residential Mortgage 4,614.8 182.4 3.95 4,690.5 168.9 3.60 Home Equity 2,217.5 87.8 3.96 2,268.0 78.2 3.45 Automobile 803.6 37.0 4.61 866.1 31.8 3.67 Other 391.1 27.4 7.01 413.8 25.3 6.12 Total Loans and Leases 13,868.9 657.0 4.74 13,851.6 592.2 4.28 Other 63.2 4.2 6.66 78.3 5.1 6.51 Total Earning Assets 2 21,790.1 867.6 3.98 22,322.9 812.4 3.64 Non-Earning Assets 1,572.6 1,631.3 Total Assets $ 23,362.7 $ 23,954.2 Interest-Bearing Liabilities Interest-Bearing Deposits Demand 3,745.9 33.2 0.89 3,978.7 27.0 0.68 Savings 8,362.3 209.7 2.51 8,018.4 137.4 1.71 Time 3,042.3 125.9 4.14 2,424.8 86.4 3.56 Total Interest-Bearing Deposits 15,150.5 368.8 2.43 14,421.9 250.8 1.74 Funds Purchased 0.8 0.0 5.46 18.5 0.9 4.79 Short-Term Borrowings 0.0 0.0 5.25 114.0 5.7 5.01 Securities Sold Under Agreements to Repurchase 118.2 4.6 3.90 530.9 16.3 3.07 Other Debt 559.6 23.8 4.24 921.8 39.7 4.30 Total Interest-Bearing Liabilities 15,829.1 397.2 2.51 16,007.1 313.4 1.96 Net Interest Income $ 470.4 $ 499.0 Interest Rate Spread 1.47 % 1.68 % Net Interest Margin 2.16 % 2.24 % Noninterest-Bearing Demand Deposits 5,385.8 5,990.5 Other Liabilities 614.6 601.1 Shareholders’ Equity 1,533.2 1,355.5 Total Liabilities and Shareholders’ Equity $ 23,362.7 $ 23,954.2 1.
Biggest changeAverage Balances and Interest Rates – Taxable-Equivalent Basis 1 Table 1 2025 2024 (dollars in millions) Average Balance Income/Expense 2 Yield/Rate Average Balance Income/Expense 2 Yield/Rate Earning Assets Cash and Cash Equivalents $ 551.4 $ 23.4 4.24 % $ 594.1 $ 30.7 5.17 % Investment Securities Available-for-Sale Taxable 3,076.5 112.7 3.66 2,433.8 89.3 3.67 Non-Taxable 28.3 1.7 5.83 9.2 0.6 6.05 Held-to-Maturity Taxable 4,409.2 77.8 1.77 4,783.5 84.9 1.78 Non-Taxable 33.9 0.7 2.10 34.5 0.7 2.10 Total Investment Securities 7,547.9 192.9 2.56 7,261.0 175.5 2.42 Loans Held for Sale 2.1 0.2 5.78 2.9 0.2 6.05 Loans and Leases 3 Commercial Mortgage 4,045.5 215.7 5.33 3,763.6 205.9 5.47 Commercial and Industrial 1,640.2 82.5 5.03 1,679.8 89.2 5.31 Construction 341.1 24.6 7.21 333.4 25.6 7.66 Commercial Lease Financing 91.8 3.7 4.05 65.1 1.7 2.68 Residential Mortgage 4,650.5 184.6 3.97 4,614.8 182.4 3.95 Home Equity 2,136.8 94.0 4.40 2,217.5 87.8 3.96 Automobile 720.4 37.9 5.26 803.6 37.0 4.61 Other 400.1 30.2 7.55 391.1 27.4 7.01 Total Loans and Leases 14,026.4 673.2 4.80 13,868.9 657.0 4.74 Other 69.5 4.5 6.47 63.2 4.2 6.66 Total Earning Assets 22,197.3 894.2 4.03 21,790.1 867.6 3.98 Non-Earning Assets 1,601.2 1,572.6 Total Assets $ 23,798.5 $ 23,362.7 Interest-Bearing Liabilities Interest-Bearing Deposits Demand $ 3,739.3 $ 29.7 0.79 % $ 3,745.9 $ 33.2 0.89 % Savings 8,674.1 190.2 2.19 8,362.3 209.7 2.51 Time 3,029.6 104.3 3.44 3,042.3 125.9 4.14 Total Interest-Bearing Deposits 15,443.0 324.2 2.10 15,150.5 368.8 2.43 Securities Sold Under Agreements to Repurchase 56.6 2.2 3.94 118.2 4.6 3.90 Other Debt 563.2 23.9 4.23 560.4 23.8 4.25 Total Interest-Bearing Liabilities 16,062.8 350.3 2.18 15,829.1 397.2 2.51 Net Interest Income $ 543.9 $ 470.4 Interest Rate Spread 1.85 1.47 Net Interest Margin 2.45 2.16 Noninterest-Bearing Demand Deposits 5,412.9 5,385.8 Other Liabilities 586.7 614.6 Shareholders’ Equity 1,736.1 1,533.2 Total Liabilities and Shareholders’ Equity $ 23,798.5 $ 23,362.7 1.
The historical loss experience for the commercial portfolio segment is primarily determined using a Cohort method. This method pools loans and leases into groups (“cohorts”) sharing similar risk characteristics based on product and risk ratings, and tracks each cohort’s historical net charge-offs to calculate a historical loss rate.
The historical loss experience for the commercial portfolio segment is primarily determined by using a Cohort method. This method pools loans and leases into groups (“cohorts”) sharing similar risk characteristics based on product and risk ratings, and tracks each cohort’s historical net charge-offs to calculate a historical loss rate.
The historical loss rates for each cohort are then averaged to calculate an overall historical loss rate which is applied to current loan balances to arrive at the quantitative baseline portion of the Allowance for most of the commercial portfolio segment. The historical loss experience for the consumer portfolio segment is primarily determined using a Vintage method.
The historical loss rates for each cohort are then averaged to calculate an overall historical loss rate which is applied to current loan balances to arrive at the quantitative baseline portion of the Allowance for most of the commercial portfolio segment. The historical loss experience for the consumer portfolio segment is primarily determined by using a Vintage method.
Operational risk is inherent in all business activities, and management of this risk is important to the achievement of Company goals and objectives. Our Operational Risk Committee (the “ORC”) provides oversight and assesses the most significant operational risks including cybersecurity risks facing the Company.
Operational risk is inherent in all business activities, and management of this risk is important to the achievement of Company goals and objectives. Our Operational Risk and Compliance Committee (the “ORC”) provides oversight and assesses the most significant operational risks including cybersecurity risks facing the Company.
The fair value of stock options, restricted stock units, and restricted stock is impacted by the market price of the Parent’s common stock on the date of grant and is at risk to changes in equity markets, general economic conditions, and other factors.
The fair value of restricted stock units and restricted stock is impacted by the market price of the Parent’s common stock on the date of grant and is at risk to changes in equity markets, general economic conditions, and other factors.
As of December 31, 2024, the Company’s capital levels remained characterized as “well-capitalized.” Management continues to monitor regulatory developments and their potential impact to the Company’s capital and liquidity requirements. Stress Testing Enactment of the Economic Growth, Regulatory Relief, and Consumer Protection Act in May 2018 significantly altered several provisions of the Dodd-Frank Act, including how stress tests are run.
As of December 31, 2025, the Company’s capital levels remained characterized as “well-capitalized.” Management continues to monitor regulatory developments and their potential impact to the Company’s capital and liquidity requirements. Stress Testing Enactment of the Economic Growth, Regulatory Relief, and Consumer Protection Act in May 2018 significantly altered several provisions of the Dodd-Frank Act, including how stress tests are run.
We require borrowers to maintain full coverage automobile insurance on automobile loans and leases, with the Bank listed as either the loss payee or additional insured. 40 Table of Contents Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 16 presents a five-year history of non-performing assets and accruing loans and leases past due 90 days or more.
We require borrowers to maintain full coverage automobile insurance on automobile loans and leases, with the Bank listed as either the loss payee or additional insured. 45 Table of Contents Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 16 presents a five-year history of non-performing assets and accruing loans and leases past due 90 days or more.
This may result in the issuer failing to make scheduled interest payments and/or being unable to repay the principal upon maturity. Our use of derivative financial instruments exposes the Company to counterparty credit risk. See Note 17 in Item 8. “Notes to Consolidated Financial Statements” for more information.
This may result in the issuer failing to make scheduled interest payments and/or being unable to repay the principal upon maturity. Our use of derivative financial instruments exposes the Company to counterparty credit risk. See Note 16 in Item 8. “Notes to Consolidated Financial Statements” for more information.
Table 21A presents, for the twelve months subsequent to December 31, 2024, and 2023, an estimate of the change in net interest income that would result from a gradual and immediate change in interest rates, moving in a parallel fashion over the entire yield curve, relative to the measured base case scenario.
Table 21A presents, for the twelve months subsequent to December 31, 2025 and 2024, an estimate of the change in net interest income that would result from a gradual and immediate change in interest rates, moving in a parallel fashion over the entire yield curve, relative to the measured base case scenario.
This method measures historical loss behavior in the form of a historical loss rate for homogenous loan pools that originate in the same period, known as a vintage. The historical loss rates are then applied to origination loan balances by vintage to determine the quantitative baseline portion of the Allowance for most of the consumer portfolio segment.
This method measures historical loss behavior in the form of a historical loss rate for homogenous loan pools that originated in the same period, known as a vintage. The historical loss rates are then applied to origination loan balances by vintage to determine the quantitative baseline portion of the Allowance for most of the consumer portfolio segment.
Our pension and postretirement benefit obligations and net periodic benefit cost are actuarially determined based on a number of key assumptions, including the discount rate, the expected return on plan assets, and the health-care cost trend rate. The accounting for pension and postretirement benefit plans reflect the long-term nature of the obligations and the investment horizon of the plan assets.
Our pension and postretirement benefit obligations and net periodic benefit cost are actuarially determined based on a number of key assumptions, including the discount rate, the expected return on plan assets, and the health-care cost trend rate. The accounting for pension and postretirement benefit plans reflects the long-term nature of the obligations and the investment horizon of the plan assets.
This category includes loans and leases that are well-secured and in the process of collection, as well as loans and leases that have not reached the specified past due status to be placed on non-accrual. 42 Table of Contents Reserve for Credit Losses The reserve for credit losses consists of the Allowance and the Unfunded Reserve.
This category includes loans and leases that are well-secured and in the process of collection, as well as loans and leases that have not reached the specified past due status to be placed on non-accrual. 47 Table of Contents Reserve for Credit Losses The reserve for credit losses consists of the Allowance and the Unfunded Reserve.
The accounting estimates that we believe to be most critical in preparing our Consolidated Financial Statements are those that are related to the determination of the reserve for credit losses, fair value estimates, and income taxes. Additional information is presented in Note 2 in Item 8.
The accounting estimates that we believe to be most critical in preparing our Consolidated Financial Statements are those that are related to the determination of the reserve for credit losses, fair value estimates, and income taxes. Additional information is presented in Note 1 in Item 8.
Maturities and Average Yield on Securities Table 7 (dollars in millions) 1 Year or Less Weighted Average Yield After 1 Year-5 Years Weighted Average Yield After 5 Years-10 Years Weighted Average Yield Over 10 Years Weighted Average Yield Total Weighted Average Yield Fair Value As of December 31, 2024 Available-for-Sale 1 Debt Securities Issued by the U.S.
Maturities and Average Yield on Securities Table 7 (dollars in millions) 1 Year or Less Weighted Average Yield After 1 Year - 5 Years Weighted Average Yield After 5 Years - 10 Years Weighted Average Yield Over 10 Years Weighted Average Yield Total Weighted Average Yield Fair Value As of December 31, 2025 Available-for-Sale 1 Debt Securities Issued by the U.S.
As of December 31, 2024 and 2023, there were no Level 3 financial liabilities recorded at fair value on a recurring basis. We also use third party pricing services to assist our management in determining the value of securities.
As of December 31, 2025 and 2024, there were no Level 3 financial liabilities recorded at fair value on a recurring basis. We also use third-party pricing services to assist our management in determining the value of securities.
Our trust and asset management income is at risk to fluctuations in the market values of underlying assets, particularly debt and equity securities. Also, our share-based compensation expense is dependent on the fair value of our stock options, restricted stock units, and restricted stock at the date of grant.
Our trust and asset management income are at risk to fluctuations in the market values of underlying assets, particularly debt and equity securities. Also, our share-based compensation expense is dependent on the fair value of our restricted stock units and restricted stock at the date of grant.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following MD&A is intended to help the reader understand the Company and its operations and is focused on our fiscal 2024 and 2023 financial results, including comparisons of year-to-year performance between these years.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following MD&A is intended to help the reader understand the Company and its operations and is focused on our fiscal 2025 and 2024 financial results, including comparisons of year-to-year performance between these years.
As of December 31, 2024 and 2023, we did not have cross-border outstandings to any foreign country which exceeded 0.75% of our total assets. Corporate Risk Profile Managing risk is an essential part of successfully operating our business.
As of December 31, 2025 and 2024, we did not have cross-border outstandings to any foreign country which exceeded 0.75% of our total assets. Corporate Risk Profile Managing risk is an essential part of successfully operating our business.
We also perform asset quality reviews which includes a review of forecasted gross charge-offs and recoveries, nonperforming assets, criticized loans and leases, and risk rating migration. The results of the asset quality review are used to consider qualitative adjustments to the quantitative baseline.
We also perform asset quality reviews which include a review of forecasted gross charge-offs and recoveries, nonperforming assets, criticized loans and leases, and risk rating migration. The results of the asset quality review are used to consider qualitative adjustments to the quantitative baseline.
In January 2025, the Parent’s Board of Directors declared the quarterly dividend of its Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A, of $10.94 per share, equivalent to $0.2735 per depositary share and its Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B, of $20.00 per share, equivalent to $0.5000 per depositary share.
In January 2026, the Parent’s Board of Directors declared a quarterly dividend of its Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A, of $10.94 per share, equivalent to $0.2735 per depositary share and its Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B, of $20.00 per share, equivalent to $0.5000 per depositary share.
Construction loans are underwritten against projected cash flows derived from rental income, business income from an owner-occupant, or the sale of the property to an end-user. We may mitigate the risks associated with these types of loans by requiring 39 Table of Contents fixed-price construction contracts, performance and payment bonding, controlled disbursements, and pre-sale contracts or pre-lease agreements.
Construction loans are underwritten against projected cash flows derived from rental income, business income from an owner-occupant, or the sale of the property to an end-user. We may mitigate the risks associated with these types of loans by requiring fixed-price construction contracts, performance and payment bonding, controlled disbursements, and pre-sale contracts or pre-lease agreements.
In determining which accounting estimates are critical accounting estimates we consider, among other things, whether the application of GAAP requires management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and whether it is likely that materially different amounts would be reported under different conditions or using different assumptions.
In determining which accounting estimates are critical accounting estimates we consider, among other things, whether the 25 Table of Contents application of GAAP requires management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and whether it is likely that materially different amounts would be reported under different conditions or using different assumptions.
After the one-year R&S loss forecast period, this adjustment assumes an immediate reversion to historical loss rates for the remaining expected life of the loan. The company utilizes the University of Hawaiʻi Economic Research Organization (“UHERO”) macroeconomic forecast that is updated quarterly based on economic conditions and events.
After the one-year R&S loss 26 Table of Contents forecast period, this adjustment assumes an immediate reversion to historical loss rates for the remaining expected life of the loan. The company utilizes the University of Hawaiʻi Economic Research Organization (“UHERO”) macroeconomic forecast that is updated quarterly based on economic conditions and events.
Purchase obligations arise from agreements to purchase goods or services that 38 Table of Contents are enforceable and legally binding. Other contracts included in purchase obligations primarily consist of service agreements for various systems and applications supporting bank operations. Pension and postretirement benefit contributions represent the minimum expected contribution to the unfunded non-qualified pension plan and postretirement benefit plan.
Purchase obligations arise from agreements to purchase goods or services that are enforceable and legally binding. Other contracts included in purchase obligations primarily consist of service agreements for various systems and applications supporting bank operations. Pension and postretirement benefit contributions represent the minimum expected contribution to the unfunded non-qualified pension plan and postretirement benefit plan.
Although a significant portion of our investment securities were in an unrealized loss position as of December 31, 2024, we believe we have sufficient access to various forms of liquidity that would alleviate the need to liquidate these investment securities and realize the losses. We continued our focus on maintaining a strong liquidity position throughout 2024.
Although a significant portion of our investment securities were in an unrealized loss position as of December 31, 2025, we believe we have sufficient access to various forms of liquidity that would alleviate the need to liquidate these investment securities and realize the losses. We continued our focus on maintaining a strong liquidity position.
Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on 22 Table of Contents which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by the federal securities laws.
Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by the federal securities laws.
The Company’s regulatory capital ratios are presented in Table 22 below. 48 Table of Contents Table 22 presents a five-year history of activities and balances in our capital accounts, along with key capital ratios.
The Company’s regulatory capital ratios are presented in Table 22 below. 54 Table of Contents Table 22 presents a five-year history of activities and balances in our capital accounts, along with key capital ratios.
Mainland is made based on where the collateral is located. For unsecured loans and leases, classification as U.S. Mainland is made based on the location where the majority of the borrower’s business operations are conducted. Our commercial and consumer lending activities are concentrated primarily in Hawaiʻi and the West Pacific.
Mainland is made based on where the collateral is located. For unsecured loans and leases, classification as U.S. Mainland is made based on the location where the majority of the borrower’s business operations are conducted. Our commercial and consumer lending activities are concentrated primarily in Hawai‘i and the West Pacific.
The results are measured relative to established limits 45 Table of Contents and early warning indicators that ensure that fluctuation in income and valuation in both up and down rate shocks remain within levels approved by the Asset and Liability Management Committee (“ALCO”) and the Board of Directors.
The results are measured relative to established limits and early warning indicators that ensure that fluctuation in income and valuation in both up and down rate shocks remain within levels approved by the Asset and Liability Management Committee (“ALCO”) and the Board of Directors.
These investments in debt securities and mortgage-backed securities were all classified in either Levels 1 or 2 of the fair value hierarchy. Financial liabilities that are recorded at fair value on a recurring basis are comprised of derivative financial instruments.
These investments in debt securities and mortgage-backed securities were all classified in either Levels 1 or 2 of the fair value hierarchy. Financial liabilities that are recorded at fair value on a recurring basis are comprised of derivative financial 27 Table of Contents instruments.
We do not offer payment-option facilities, sub-prime or Alt-A loans, or any product with negative amortization. We selectively offer interest-only mortgage loans to private banking clients. Home equity lines and loans are secured primarily by a first lien mortgage, or a second lien mortgage on a primary residence, secondary residence, or investor property.
We do not offer payment-option facilities, sub-prime or Alt-A loans, or any product with negative amortization. We selectively offer interest-only mortgage loans to private banking clients. 44 Table of Contents Home equity lines and loans are secured primarily by a first lien mortgage, or a second lien mortgage on a primary residence, secondary residence, or investor property.
Our internal audit department also validates the system of internal controls through ongoing risk-based audit procedures and reports on the effectiveness of internal controls to executive management and the Audit Committee of the Board of Directors. We continuously strive to strengthen our system of internal controls to improve the oversight of operational risk.
Our internal audit department also validates the system of 56 Table of Contents internal controls through ongoing risk-based audit procedures and reports on the effectiveness of internal controls to executive management and the Audit Committee of the Board of Directors. We continuously strive to strengthen our system of internal controls to improve the oversight of operational risk.
The forecast includes various economic variables for Hawaiʻi such as gross domestic product (“GDP”), unemployment rate, visitor arrivals, residential real estate market conditions, personal income, and inflation rate. We also utilize other forecast tools for broader U.S. economic variables such as interest rates, as well as to apply any overlays to the forecast.
The forecast includes various economic variables for Hawaiʻi such as gross domestic product (“GDP”), unemployment rate, visitor arrivals, residential real estate market conditions, personal income, and inflation rate. We also utilize other forecast tools for broader U.S. economic variables such as interest rates, and apply any overlays to the R&S loss forecast as relevant.
See Note 4 in Item 8. “Notes to Consolidated Financial Statements” for more information on the Allowance and credit quality indicators.
See Note 3 in Item 8. “Notes to Consolidated Financial Statements” for more information on the Allowance and credit quality indicators.
As of December 31, 2024, our hedging program consisted primarily of pay-fixed interest rate swaps. As interest rates change, we may use different instruments to manage interest rate risk, including caps, floors, swaptions and other commonly utilized derivative instruments. See Note 17 in Item 8.
As of December 31, 2025, our hedging program consisted primarily of pay-fixed interest rate swaps. As interest rates change, we may use different instruments to manage interest rate risk, including caps, floors, swaptions and other commonly utilized derivative instruments. See Note 16 in Item 8.
Our forward-looking statements are based on numerous assumptions, any of which could prove to be inaccurate, and actual results may differ materially from those projected because of a variety of risks and uncertainties, including, but not limited to: (1) Our business is sensitive to regional business and economic conditions, in particular those of Hawaiʻi, Guam and other Pacific Islands; (2) Our loan portfolio is largely secured by real estate, and a downturn in the real estate market may adversely affect our results of operations; (3) A sustained period of high inflation could pose a risk to local economies and the financial performance of the Bank; (4) Climate change and the governmental responses to it could have a material adverse impact on the Bank and its customers; (5) Disruptions, instability and failures in the banking industry may negatively impact us; (6) Any reduction in defense spending by the federal government in the state of Hawaiʻi could adversely impact the economy in Hawaiʻi and the Pacific Islands; (7) Changes in interest rates could adversely impact our results of operations and capital; (8) Our allowance for credit losses may prove to be insufficient to absorb losses or appropriately reflect, at any given time, the inherent risk of loss in our loan portfolio; (9) Consumer protection initiatives and court decisions related to the foreclosure process affect our remedies as a creditor; (10) Changes in the capital markets could materially affect the level of assets under management and the demand for our other fee-based services; (11) The Parent’s liquidity is dependent on dividends from the Bank; (12) There can be no assurance that the Parent will continue to declare cash dividends; (13) Fiscal and monetary policy changes may significantly impact our profitability and liquidity; (14) Legislation and regulatory initiatives affecting the financial services industry, including new interpretations, restrictions and requirements, could detrimentally affect the Company’s business; (15) Changes in income tax laws and interpretations, or in accounting standards, could materially affect our financial condition or results of operations; (16) A failure in or breach of our operational systems, information systems, or infrastructure, or those of our third party vendors and other service providers, may result in financial losses, loss of customers, or damage to our reputation; (17) An interruption or breach in security of our information systems or those related to merchants and third party vendors, including as a result of cyber-attacks, could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, or result in financial losses; (18) Our mortgage banking income may experience significant volatility; (19) Our mortgage loan servicing business may be impacted if we do not meet our obligations, or if servicing standards change; (20) Risks related to representation and warranty provisions may impact our mortgage loan servicing business; (21) Risks relating to residential mortgage loan servicing activities may adversely affect our results; (22) The requirement to record certain assets and liabilities at fair value may adversely affect our financial results (23) Natural disasters and adverse weather in Hawaiʻi and the Pacific Islands may negatively affect real estate property values and our operations (24) Competition may adversely affect our business; (25) Our future performance will depend on our ability to respond timely to technological change; (26) Negative public opinion could damage our reputation and adversely impact our earnings and liquidity (27) We are subject to certain litigation, and our expenses related to this litigation may adversely affect our results; (28) Our performance depends on attracting and retaining key employees and skilled personnel to operate our business effectively; (29) The soundness of other financial institutions may adversely impact our financial condition or results of operations; and (30) We have experienced increases in FDIC insurance assessments.
Given these risks and uncertainties, you should not place undue reliance on any forward-looking statement as a prediction of our actual results. 24 Table of Contents Our forward-looking statements are based on numerous assumptions, any of which could prove to be inaccurate, and actual results may differ materially from those projected because of a variety of risks and uncertainties, including, but not limited to: (1) Our business is sensitive to regional business and economic conditions, in particular those of Hawaiʻi, Guam and other Pacific Islands; (2) Our loan portfolio is largely secured by real estate, and a downturn in the real estate market may adversely affect our results of operations; (3) Significant changes to the size, structure, powers and operations of the federal government, the effects of any prolonged shutdown of the federal government, changes to U.S. economic policies, and uncertainties regarding the potential for these changes may cause economic disruptions that could, in turn, adversely impact our business, results of operations and financial condition; (4) A sustained period of high inflation could pose a risk to local economies and the financial performance of the Bank; (5) Climate change and the governmental responses to it could have a material adverse impact on the Bank and its customers; (6) Disruptions, instability and failures in the banking industry may negatively impact us; (7) Any reduction in defense spending by the federal government in the state of Hawaiʻi could adversely impact the economy in Hawaiʻi and the Pacific Islands; (8) Changes in interest rates could adversely impact our results of operations and capital; (9) Our allowance for credit losses may prove to be insufficient to absorb losses or appropriately reflect, at any given time, the inherent risk of loss in our loan portfolio; (10) Consumer protection initiatives and court decisions related to the foreclosure process affect our remedies as a creditor; (11) Changes in the capital markets could materially affect the level of assets under management and the demand for our other fee-based services; (12) The Parent’s liquidity is dependent on dividends from the Bank; (13) There can be no assurance that the Parent will continue to declare cash dividends; (14) Fiscal and monetary policy changes may significantly impact our profitability and liquidity; (15) Legislation and regulatory initiatives affecting the financial services industry, including new interpretations, restrictions and requirements, could detrimentally affect the Company’s business; (16) Changes in income tax laws and interpretations, or in accounting standards, could materially affect our financial condition or results of operations; (17) A failure in or breach of our operational systems, information systems, or infrastructure, or those of our third-party vendors and other service providers, may result in financial losses, loss of customers, or damage to our reputation; (18) An interruption or breach in security of our information systems or those related to merchants and third-party vendors, including as a result of cyber-attacks, could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, or result in financial losses; (19) Our mortgage banking income may experience significant volatility; (20) Our mortgage loan servicing business may be impacted if we do not meet our obligations, or if servicing standards change; (21) Risks related to representation and warranty provisions may impact our mortgage loan servicing business; (22) Risks relating to residential mortgage loan servicing activities may adversely affect our results; (23) The requirement to record certain assets and liabilities at fair value may adversely affect our financial results (24) Natural disasters and adverse weather in Hawaiʻi and the Pacific Islands may negatively affect real estate property values and our operations (25) Competition may adversely affect our business; (26) Our future performance will depend on our ability to respond timely to technological change; (27) The development and use of AI present risks and challenges that may adversely impact our business; (28) Negative public opinion could damage our reputation and adversely impact our earnings and liquidity (29) We are subject to certain litigation, and our expenses related to this litigation may adversely affect our results; (30) Our performance depends on attracting and retaining key employees and skilled personnel to operate our business effectively; (31) The soundness of other financial institutions may adversely impact our financial condition or results of operations; and (32) We have experienced increases in FDIC insurance assessments.
While we recognize that instantaneous parallel shocks of the entire yield curve are unrealistic, we believe that the application of immediate shocks provides us with a sufficient range of potential outcomes to frame our risk exposures.
While we recognize that instantaneous parallel shocks of the entire yield curve are unrealistic, we believe that the application of immediate shocks provides us with a sufficient range of sensitivities to frame our risk exposures.
However, if we commit a material breach of 50 Table of Contents obligations as servicer, we may be subject to various penalties which may include the repurchase of an affected loan or a reimbursement to the respective investor.
However, if we commit a material breach of obligations as servicer, we may be subject to various penalties which may include the repurchase of an affected loan or a reimbursement to the respective investor.
Critical Accou nting Estimates Our Consolidated Financial Statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and follow general practices within the industries in which we operate. The most significant accounting policies we follow are presented in Note 2 in Item 8.
Critical Accounting Estimates Our Consolidated Financial Statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and follow general practices within the industries in which we operate. The most significant accounting policies we follow are presented in Note 1 in Item 8.
As of December 31, 2024 and 2023, Level 3 financial assets recorded at fair value on a recurring basis were $0.7 million and $0.8 million, respectively, or less than 1% of our total assets, and were comprised primarily of mortgage servicing rights and derivative financial instruments.
As of December 31, 2025 and 2024, Level 3 financial assets recorded at fair value on a recurring basis were $0.6 million and $0.7 million, respectively, or less than 1% of our total assets, and were comprised primarily of mortgage servicing rights and derivative financial instruments.
As of December 31, 2024, we had pledged loans to the FHLB and had remaining borrowing capacity of $1.7 billion. In addition, we utilize our investment securities portfolio as collateral to secure deposits of public entities as well as repurchase agreements with private institution counterparties.
As of December 31, 2025, we had pledged loans to the FHLB and had remaining borrowing capacity of $2.1 billion. In addition, we utilize our investment securities portfolio as collateral to secure deposits of public entities as well as repurchase agreements with private institution counterparties.
The Company and the Bank are each subject to regulatory capital requirements administered by the federal banking agencies and the Division of Financial Institutions, an agency of the State of Hawaiʻi Department of Commerce and Consumer Affairs.
The Company and the Bank are each subject to regulatory capital requirements administered by the federal banking agencies and the Division of Financial Institutions, an agency of the State of Hawai‘i Department of Commerce and Consumer Affairs.
Generally, we do not adjust the price from the third party service provider. 5) On an annual basis, we obtain and review the third party’s most recently issued Service Organization Controls report related to controls placed in operation and tests of operating effectiveness, to update our understanding of the third party pricing service’s control environment.
Generally, we do not adjust the price from the third-party service provider. 5) On an annual basis, we obtain and review the third party’s most recently issued Service Organization Controls report related to controls placed in operation and tests of operating effectiveness, to update our understanding of the third-party pricing service’s control environment. See Note 20 in Item 8.
Due to rounding, the amounts presented in this schedule may not tie to other amounts presented elsewhere in this report. 2. Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 21% of $3.8 million and $2.0 million for the years ended December 31, 2024, and 2023, respectively. 3.
Due to rounding, the amounts presented in this schedule may not tie to other amounts presented elsewhere in this report. 2. Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 21% of $6.4 million and $3.8 million for the years ended December 31, 2025, and 2024, respectively. 3.
Other Credit Risks In the normal course of business, we serve the needs of state and political subdivisions in multiple capacities, including traditional banking products such as deposit services, and by investing in municipal debt securities. The carrying value of our municipal debt securities was $63.9 million as of December 31, 2024, and $63.8 million as of December 31, 2023.
Other Credit Risks In the normal course of business, we serve the needs of state and political subdivisions in multiple capacities, including traditional banking products such as deposit services, and by investing in municipal debt securities. The carrying value of our municipal debt securities was $66.3 million as of December 31, 2025, and $63.9 million as of December 31, 2024.
Forward-Lookin g Statements This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-Looking Statements This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
These assets are primarily funded by deposit balances, which generally have an indeterminate life. Historically, our deposit base has consisted primarily of core consumer and commercial deposit relationships.
These assets are primarily funded by deposit balances, which generally have an indeterminate life. Historically, our deposit base consists primarily of core consumer and commercial deposit relationships.
We also maintained investments in corporate bonds with a carrying value of $682.2 million as of December 31, 2024, and $669.2 million as of December 31, 2023. We are exposed to credit risk in these investments should the issuer of a security be unable to meet its financial obligations.
We also maintained investments in corporate bonds with a carrying value of $745.9 million as of December 31, 2025, and $682.2 million as of December 31, 2024. We are exposed to credit risk in these investments should the issuer of a security be unable to meet its financial obligations.
For the Allowance at December 31, 2024, a 50 basis point increase in the percentage of commercial loans risk rated as Classified would increase the quantitative component of the Allowance for commercial loans by an estimated $2.0 million.
For the Allowance at December 31, 2025, a 50-basis point increase in the percentage of commercial loans risk rated as Classified would increase the quantitative component of the Allowance for commercial loans by an estimated $2.1 million.
As of December 31, 2024 and 2023, our liabilities for UTBs were $5.3 million and $3.7 million, respectively. Overview We are a regional financial services company serving businesses, consumers, and governments in Hawaiʻi, Guam, and other Pacific Islands. Our principal operating subsidiary, the Bank, was founded in 1897.
As of December 31, 2025 and 2024, our liabilities for UTBs were $3.5 million and $5.3 million, respectively. 28 Table of Contents Overview We are a regional financial services company serving businesses, consumers, and governments in Hawaiʻi, Guam, and other Pacific Islands. Our principal operating subsidiary, the Bank, was founded in 1897.
Allow. as % of Loan or Lease Category Loan Category as % of Total Loans and Leases Commercial Commercial Mortgage 1.09 % 28.56 % 0.87 % 26.85 % 0.87 % 27.30 % 0.95 % 25.71 % 1.11 % 23.91 % Commercial and Industrial 1.93 12.11 2.05 11.91 1.72 10.32 1.86 12.14 2.30 15.70 Construction 1.72 2.19 1.67 2.18 1.62 1.91 1.96 1.80 2.09 2.18 Lease Financing 2.20 0.64 3.84 0.43 4.04 0.51 2.85 0.86 4.17 0.93 Total Commercial 1.37 43.52 1.28 41.37 1.17 40.04 1.31 40.51 1.66 42.72 Consumer Residential Mortgage 0.34 32.88 0.42 33.55 0.37 34.10 0.48 35.15 0.79 34.59 Home Equity 0.56 15.38 0.63 16.22 0.75 16.31 1.03 14.98 2.37 13.44 Automobile 2.24 5.43 2.24 6.00 2.48 6.38 3.40 6.01 4.07 5.94 Other 5.02 2.79 4.93 2.86 5.84 3.17 6.88 3.35 8.08 3.31 Total Consumer 0.81 56.48 0.88 58.63 0.98 59.96 1.27 59.49 1.92 57.28 Total 1.06 % 100.00 % 1.05 % 100.00 % 1.06 % 100.00 % 1.29 % 100.00 % 1.81 % 100.00 % Allowance for Credit Losses – Loans and Leases As of December 31, 2024, the Allowance was $148.5 million or 1.06% of total loans and leases outstanding compared with an Allowance of $146.4 million or 1.05% of total loans and leases outstanding as of December 31, 2023.
Allow. as % of Loan or Lease Category Loan Category as % of Total Loans and Leases Commercial Commercial Mortgage 1.19 % 29.87 % 1.09 % 28.56 % 0.87 % 26.85 % 0.87 % 27.30 % 0.95 % 25.71 % Commercial and Industrial 1.50 11.25 1.93 12.11 2.05 11.91 1.72 10.32 1.86 12.14 Construction 1.86 1.48 1.72 2.19 1.67 2.18 1.62 1.91 1.96 1.80 Lease Financing 1.80 0.63 2.20 0.64 3.84 0.43 4.04 0.51 2.85 0.86 Total Commercial 1.31 43.22 1.37 43.52 1.28 41.37 1.17 40.04 1.31 40.51 Consumer Residential Mortgage 0.29 33.91 0.34 32.88 0.42 33.55 0.37 34.10 0.48 35.15 Home Equity 0.63 15.02 0.56 15.38 0.63 16.22 0.75 16.31 1.03 14.98 Automobile 2.38 4.90 2.24 5.43 2.24 6.00 2.48 6.38 3.40 6.01 Other 5.69 2.94 5.02 2.79 4.93 2.86 5.84 3.17 6.88 3.35 Total Consumer 0.84 56.78 0.81 56.48 0.88 58.63 0.98 59.96 1.27 59.49 Total 1.04 % 100.00 % 1.06 % 100.00 % 1.05 % 100.00 % 1.06 % 100.00 % 1.29 % 100.00 % Allowance for Credit Losses (the “Allowance”) As of December 31, 2025, the Allowance was $146.8 million or 1.04% of total loans and leases outstanding compared with an Allowance of $148.5 million or 1.06% of total loans and leases outstanding as of December 31, 2024.
The primary source of repayment for investor property is cash flow from the property and for owner-occupied property is the operating cash flow from the business. 34 Table of Contents Table 8A presents an additional breakdown of the Company’s commercial mortgage portfolio.
The primary source of repayment for investor property is cash flow from the property and for owner-occupied property is the operating cash flow from the business. 38 Table of Contents Table 9 presents an additional breakdown of the Company’s commercial mortgage portfolio.
Discussion and analysis of our 2022 fiscal year, as well as the year-to-year comparison between fiscal 2023 and 2022, are included in Part II, Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024.
Discussion and analysis of our 2023 fiscal year, as well as the year-to-year comparison between fiscal 2024 and 2023, are included in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 4, 2025.
Provision for Credit Losses The provision for credit losses was $11.2 million for the year ended December 31, 2024 compared to $9.0 million in the prior year. The increase in the provision was due to a higher provision for the Allowance for loans and leases, partially offset by a lower provision for the Unfunded Reserve.
Provision for Credit Losses The provision for credit losses was $11.5 million for the year ended December 31, 2025 compared to $11.2 million in the prior year. The increase in the provision was due to a higher provision for the Allowance for loans and leases, partially offset by a lower provision for the Unfunded Reserve.
If interest due on the balances of all non-accrual loans as of December 31, 2024 had been accrued under the original terms, approximately $1.2 million in total interest income would have been recognized in 2024.
If interest due on the balances of all non-accrual loans as of December 31, 2025 had been accrued under the original terms, approximately $1.0 million in additional total interest income would have been recognized in 2025.
As of December 31, 2024 and 2023, $2.9 billion or 12% and $2.5 billion or 11%, respectively, of our total assets consisted of financial assets recorded at fair value on a recurring basis and most of these financial assets consisted of available-for-sale investment securities measured using information from a third party pricing service.
As of December 31, 2025 and 2024, $3.6 billion or 15% and $2.9 billion or 12%, respectively, of our total assets consisted of financial assets recorded at fair value on a recurring basis and most of these financial assets consisted of available-for-sale investment securities measured using information from a third-party pricing service.
As of December 31, 2024, we had pledged loans and investment securities to the Federal Reserve Discount Window and had remaining borrowing capacity of $7.4 billion. We are 47 Table of Contents also a member of the Federal Home Loan Bank (“FHLB”) of Des Moines.
As of December 31, 2025, we had pledged loans and investment securities to the Federal Reserve Discount Window and had remaining borrowing capacity of $7.7 billion. We are also a member of the Federal Home Loan Bank (“FHLB”) of Des Moines.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in our most recent Annual Report on Form 10-K and in subsequent SEC filings.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Annual Report on Form 10-K and in subsequent SEC filings.
On an ongoing basis, properties are appraised as required by market conditions and applicable regulations. Foreclosed real estate was $2.7 million as of December 31, 2024.
On an ongoing basis, properties are appraised as required by market conditions and applicable regulations. Foreclosed real estate was $0.3 million as of December 31, 2025 compared to $2.7 million as of December 31, 2024.
For the Allowance at December 31, 2024, a 25 basis point increase in the forecasted Hawaiʻi unemployment rates would have increased the quantitative component of the Allowance for consumer loans by an estimated $1.4 million.
For the Allowance at December 31, 2025, a 25-basis point increase in the forecasted Hawaiʻi unemployment rates would have increased the qualitative component of the Allowance for consumer loans by an estimated $1.2 million.
“Notes to Consolidated Financial Statements” and the “Corporate Risk Profile – Credit Risk” section of Item 7. MD&A for more information on our loan and lease portfolio. 35 Table of Contents Table 9 presents the geographic distribution of our loan and lease portfolio. Geographic Distribution of Loan and Lease Portfolio Table 9 December 31, 2024 (dollars in thousands) Hawaiʻi U.S.
“Notes to Consolidated Financial Statements” and the “Corporate Risk Profile – Credit Risk” section of Item 7. MD&A for more information on our loan and lease portfolio. 39 Table of Contents Table 10 presents the geographic distribution of our loan and lease portfolio. Geographic Distribution of Loan and Lease Portfolio Table 10 (dollars in thousands) Hawai ‘ i U.S.
Net charge-offs of loans and leases were $12.9 million or 0.09% of total average loans and leases in 2024 compared to $7.8 million or 0.06% of total average loans and leases in the prior year. Net charge-offs in our consumer portfolios were $11.2 million in 2024 compared to $7.2 million in the prior year.
Net charge-offs of loans and leases were $13.7 million or 0.10% of total average loans and leases in 2025 compared to $12.9 million or 0.09% of total average loans and leases in the prior year. Net charge-offs in our consumer portfolios were $11.0 million in 2025 compared to $11.2 million in the prior year.
As of December 31, 2024, and 2023, $154.1 million and $143.9 million, respectively, or less than 1% of our total liabilities consisted of financial liabilities recorded at fair value on a recurring basis.
As of December 31, 2025 and 2024, $107.2 million and $154.1 million, respectively, or less than 1% of our total liabilities consisted of financial liabilities recorded at fair value on a recurring basis.
Failure to meet minimum capital requirements could cause certain mandatory and discretionary actions by regulators that, if undertaken, would likely have a material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative and qualitative measures.
Failure to meet minimum capital requirements could cause certain mandatory and discretionary actions by regulators that, if undertaken, would likely have a material effect on our financial statements. The Company and the Bank must meet specific capital guidelines that involve quantitative and qualitative measures intended to ensure capital adequacy.
Owner-occupant commercial mortgage loans are underwritten based upon the cash flow of the business provided that the real estate asset is utilized in the operation of the business. Real estate is evaluated independently as a secondary source of repayment.
In addition, business interruption insurance or other insurance may be required. Owner-occupant commercial mortgage loans are underwritten based upon the cash flow of the business provided that the real estate asset is utilized in the operation of the business. Real estate is evaluated independently as a secondary source of repayment.
Table 18 presents the activity in the Company’s reserve for credit losses for the years ended December 31: Reserve for Credit Losses Table 18 (dollars in thousands) 2024 2023 2022 2021 2020 Balance at Beginning of Period $ 152,429 $ 151,247 $ 164,297 $ 221,303 $ 116,849 CECL Adoption (Day 1) Impact — — — — (5,072 ) Loans and Leases Charged-Off Commercial Commercial and Industrial (2,609 ) (987 ) (925 ) (1,117 ) (1,697 ) Consumer Residential Mortgage (385 ) (6 ) (80 ) (316 ) (204 ) Home Equity (701 ) (82 ) (100 ) (417 ) (397 ) Automobile (5,342 ) (5,247 ) (4,652 ) (4,939 ) (6,496 ) Other (10,099 ) (8,645 ) (7,585 ) (10,530 ) (12,244 ) Total Loans and Leases Charged-Off (19,136 ) (14,967 ) (13,342 ) (17,319 ) (21,038 ) Recoveries on Loans and Leases Previously Charged-Off Commercial Commercial and Industrial 832 350 552 506 2,288 Commercial Mortgage — — — — 40 Consumer Residential Mortgage 303 489 1,193 2,467 1,292 Home Equity 792 1,073 1,500 1,666 2,892 Automobile 2,168 2,782 2,276 3,510 3,775 Other 2,111 2,455 2,702 3,205 3,613 Total Recoveries on Loans and Leases Previously Charged-Off 6,206 7,149 8,223 11,354 13,900 Net Charged-Off - Loans and Leases (12,930 ) (7,818 ) (5,119 ) (5,965 ) (7,138 ) Net Charged-Off - Accrued Interest Receivable — — (131 ) (541 ) — Provision for Credit Losses 1 Loans and Leases 15,055 9,782 (8,263 ) (52,466 ) 115,100 Accrued Interest Receivable 2 — — (283 ) (1,745 ) 2,700 Unfunded Commitments 3 (3,905 ) (782 ) 746 3,711 (1,136 ) Total Provision for Credit Losses 11,150 9,000 (7,800 ) (50,500 ) 116,664 Balance at End of Period $ 150,649 $ 152,429 $ 151,247 $ 164,297 $ 221,303 Components Allowance for Credit Losses - Loans and Leases $ 148,528 $ 146,403 $ 144,439 $ 157,821 $ 216,252 Allowance for Credit Losses - Accrued Interest Receivable 2 — — — 414 2,700 Reserve for Unfunded Commitments 3 2,121 6,026 6,808 6,062 2,351 Total Reserve for Credit Losses $ 150,649 $ 152,429 $ 151,247 $ 164,297 $ 221,303 Average Loans and Leases Outstanding $ 13,868,916 $ 13,851,551 $ 12,896,510 $ 12,023,669 $ 11,592,093 Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding 0.09 % 0.06 % 0.04 % 0.05 % 0.06 % Ratio of Allowance for Credit Losses to Loans and Leases Outstanding 4 1.06 % 1.05 % 1.06 % 1.29 % 1.81 % 1.
Table 18 presents the activity in the Company’s reserve for credit losses for the years ended December 31: Reserve for Credit Losses Table 18 (dollars in thousands) 2025 2024 2023 2022 2021 Balance at Beginning of Period $ 150,649 $ 152,429 $ 151,247 $ 164,297 $ 221,303 Loans and Leases Charged-Off Commercial Commercial and Industrial (3,107) (2,609) (987) (925) (1,117) Consumer Residential Mortgage — (385) (6) (80) (316) Home Equity (423) (701) (82) (100) (417) Automobile (6,026) (5,342) (5,247) (4,652) (4,939) Other (9,465) (10,099) (8,645) (7,585) (10,530) Total Loans and Leases Charged-Off (19,021) (19,136) (14,967) (13,342) (17,319) Recoveries on Loans and Leases Previously Charged-Off Commercial Commercial and Industrial 345 832 350 552 506 Consumer Residential Mortgage 91 303 489 1,193 2,467 Home Equity 573 792 1,073 1,500 1,666 Automobile 2,266 2,168 2,782 2,276 3,510 Other 2,000 2,111 2,455 2,702 3,205 Total Recoveries on Loans and Leases 5,275 6,206 7,149 8,223 11,354 Net Charged-Off - Loans and Leases (13,746) (12,930) (7,818) (5,119) (5,965) Net Charged-Off - Accrued Interest Receivable — — — (131) (541) Provision for Credit Losses 1 Loans and Leases 11,984 15,055 9,782 (8,263) (52,466) Accrued Interest Receivable 2 — — — (283) (1,745) Unfunded Commitments 3 (484) (3,905) (782) 746 3,711 Total Provision for Credit Losses 11,500 11,150 9,000 (7,800) (50,500) Balance at End of Period $ 148,403 $ 150,649 $ 152,429 $ 151,247 $ 164,297 Components Allowance for Credit Losses - Loans and Leases $ 146,766 $ 148,528 $ 146,403 $ 144,439 $ 157,821 Allowance for Credit Losses - Accrued Interest Receivable 2 — — — — 414 Reserve for Unfunded Commitments 3 1,637 2,121 6,026 6,808 6,062 Total Reserve for Credit Losses $ 148,403 $ 150,649 $ 152,429 $ 151,247 $ 164,297 Average Loans and Leases Outstanding $ 14,026,427 $ 13,868,916 $ 13,851,551 $ 12,896,510 $ 12,023,669 Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding 0.10 % 0.09 % 0.06 % 0.04 % 0.05 % Ratio of Allowance for Credit Losses to Loans and Leases Outstanding 4 1.04 % 1.06 % 1.05 % 1.06 % 1.29 % 1.
In 2022, the reserve on accrued interest receivable was fully released. 3. The reserve for unfunded commitments is separately recorded in other liabilities in the consolidated statements of condition. For the years ended December 31, 2021 through 2024, the offsetting provision was recorded in provision for credit losses in the consolidated statements of income.
In 2022, the reserve on accrued interest receivable was fully released. 3. The reserve for unfunded commitments is separately recorded in other liabilities in the consolidated statements of condition. The offsetting provision was recorded in provision for credit losses in the consolidated statements of income. 4.
Maturity Distribution of Estimated Uninsured Time Deposits Table 13 December 31, (dollars in thousands) 2024 Remaining maturity: Three months or less $ 635,812 After three through six months 365,354 After six through twelve months 524,286 After twelve months 102,795 Total $ 1,628,247 Uninsured amounts are estimated based on the portion of account balances in excess of FDIC insurance limits.
Maturity Distribution of Estimated Uninsured Time Deposits Table 14 (dollars in thousands) December 31, 2025 December 31, 2024 Remaining maturity: Three months or less $ 613,444 $ 635,812 After three through six months 396,599 365,354 After six through twelve months 320,938 524,286 After twelve months 86,151 102,795 Total $ 1,417,132 $ 1,628,247 Uninsured amounts are estimated based on the portion of account balances in excess of FDIC insurance limits.
Treasury and Government Agencies $ 7.5 0.3 % $ 74.8 1.3 % $ 49.6 1.5 % $ — 0.0 % $ 131.9 1.3 % $ 116.9 Debt Securities Issued by Corporations — — — — 10.5 1.6 — — 10.5 1.6 8.3 Collateralized Mortgage Obligations 2 : Residential - U.S.
Treasury and Government Agencies $ — — % $ 74.8 1.3 % $ 49.6 1.5 % $ — — % $ 124.5 1.4 % $ 115.8 Debt Securities Issued by Corporations — — — — 10.2 1.6 — — 10.2 1.6 8.7 Collateralized Mortgage Obligations 2 : Residential - U.S.
Compared to 2023, net loan and lease charge-offs increased by $2.7 million or 2 basis points on total average loans and leases outstanding. • The allowance for credit losses on loans and leases was $148.5 million as of December 31, 2024, an increase of $2.1 million from the prior year.
Compared to 2024, net loan and lease charge-offs increased by $0.8 million or 1 basis point on total average loans and leases outstanding. • The allowance for credit losses on loans and leases was $146.8 million as of December 31, 2025, an increase of $1.8 million from the prior year.
Allocation of Allowance for Credit Losses Table 19 December 31, (dollars in thousands) 2024 2023 2022 2021 2020 Commercial Commercial Mortgage $ 43,745 $ 32,646 $ 32,588 $ 29,997 $ 31,723 Commercial and Industrial 32,840 34,036 24,283 27,650 43,092 Construction 5,315 5,090 4,223 4,311 5,417 Lease Financing 2,000 2,302 2,806 2,992 4,615 Total Commercial 83,900 74,074 63,900 64,950 84,847 Consumer Residential Mortgage 15,685 19,452 17,079 20,721 32,643 Home Equity 12,130 14,317 16,654 18,924 37,987 Automobile 17,116 18,799 21,566 25,018 28,822 Other 19,697 19,761 25,240 28,208 31,953 Total Consumer 64,628 72,329 80,539 92,871 131,405 Total Allocation of Allowance for Credit Losses $ 148,528 $ 146,403 $ 144,439 $ 157,821 $ 216,252 Allocation of Allowance as Percent of Loan or Lease Category Table 20 December 31, 2024 2023 2022 2021 2020 Alloc.
Allocation of Allowance for Credit Losses Table 19 December 31, (dollars in thousands) 2025 2024 2023 2022 2021 Commercial Commercial Mortgage $ 50,244 $ 43,745 $ 32,646 $ 32,588 $ 29,997 Commercial and Industrial 23,834 32,840 34,036 24,283 27,650 Construction 3,876 5,315 5,090 4,223 4,311 Lease Financing 1,589 2,000 2,302 2,806 2,992 Total Commercial 79,543 83,900 74,074 63,900 64,950 Consumer Residential Mortgage 13,979 15,685 19,452 17,079 20,721 Home Equity 13,261 12,130 14,317 16,654 18,924 Automobile 16,398 17,116 18,799 21,566 25,018 Other 23,585 19,697 19,761 25,240 28,208 Total Consumer 67,223 64,628 72,329 80,539 92,871 Total Allocation of Allowance for Credit Losses $ 146,766 $ 148,528 $ 146,403 $ 144,439 $ 157,821 Allocation of Allowance as Percent of Loan or Lease Category Table 20 December 31, 2025 2024 2023 2022 2021 Alloc.
The homogenous loan pools are segmented according to similar risk characteristics (e.g., residential mortgage, home equity) and may be sub-segmented further based on historical loss behavior.
The homogenous loan pools are segmented according to similar risk characteristics (e.g., residential mortgage, home equity) and may be sub-segmented further based on historical loss behavior. For example, we sub-segment residential mortgages by geography and home equity by lien position.
As of December 31, 2024, our residential mortgage non-accrual loans were comprised of 19 loans with a weighted average current loan-to-value of 77%. Foreclosed real estate represents property acquired as the result of borrower defaults on loans. Foreclosed real estate is recorded at fair value, less estimated selling costs, at the time of foreclosure.
As of December 31, 2025, our home equity non-accrual loans of $4.5 million were comprised of 55 loans with a weighted average current loan-to-value ratio of 52%. Foreclosed real estate represents property acquired as the result of borrower defaults on loans. Foreclosed real estate is recorded at fair value, less estimated selling costs, at the time of foreclosure.
Lease financing primarily consists of sales-type leases to finance capital purchases ranging from computer equipment to equipment and vehicles. The credit decisions for these transactions are based upon an assessment of the overall financial capacity of the applicant.
Commercial and industrial loans are made primarily for the purpose of financing equipment acquisition, expansion, working capital, and other general business purposes. Lease financing primarily consists of sales-type leases to finance capital purchases ranging from computer equipment to equipment and vehicles. The credit decisions for these transactions are based upon an assessment of the overall financial capacity of the applicant.
Shareholders’ Equity and Regulatory Capital Table 22 December 31, (dollars in thousands) 2024 2023 2022 2021 2020 Change in Shareholders' Equity Net Income $ 149,994 $ 171,202 $ 225,804 $ 253,372 $ 153,804 Cash Dividends Paid on Common Shares (112,313 ) (111,795 ) (112,557 ) (110,633 ) (107,434 ) Cash Dividends Paid on Preferred Shares (12,644 ) (7,877 ) (7,877 ) (2,975 ) — Dividend Reinvestment Program 4,246 4,535 4,680 4,835 5,012 Preferred Stock Issued, Net 160,614 — — 175,487 — Common Stock Repurchased (5,302 ) (14,290 ) (55,063 ) (31,258 ) (18,006 ) Other 1 68,937 55,472 (349,603 ) (51,724 ) 54,299 Increase (Decrease) in Shareholders' Equity $ 253,532 $ 97,247 $ (294,616 ) $ 237,104 $ 87,675 Regulatory Capital Total Common Shareholders' Equity $ 1,322,774 $ 1,238,756 $ 1,141,508 $ 1,436,124 $ 1,374,507 Add: CECL Transitional Amount 2,375 4,749 7,124 9,498 23,750 Less: Goodwill, Net of Deferred Tax Liabilities 28,746 28,746 28,746 28,747 28,718 Postretirement Benefit Liability Adjustments (23,396 ) (23,261 ) (25,078 ) (33,496 ) (43,250 ) Net Unrealized Gains (Losses) on Investment Securities (319,993 ) (373,427 ) (409,579 ) (32,886 ) 51,072 Other (9,097 ) (198 ) (198 ) (198 ) (198 ) Common Equity Tier 1 Capital 1,648,889 1,611,645 1,554,741 1,483,455 1,361,915 Preferred Stock, Net of Issuance Cost 336,101 175,487 175,487 175,487 — Tier 1 Capital 1,984,990 1,787,132 1,730,228 1,658,942 1,361,915 Allowable Reserve for Credit Losses 148,634 148,400 145,202 153,001 141,869 Total Regulatory Capital $ 2,133,624 $ 1,935,532 $ 1,875,430 $ 1,811,943 $ 1,503,784 Risk-Weighted Assets $ 14,225,908 $ 14,226,780 $ 14,238,798 $ 12,236,805 $ 11,295,077 Key Regulatory Capital Ratios Common Equity Tier 1 Capital Ratio 11.59 % 11.33 % 10.92 % 12.12 % 12.06 % Tier 1 Capital Ratio 13.95 12.56 12.15 13.56 12.06 Total Capital Ratio 15.00 13.60 13.17 14.81 13.31 Tier 1 Leverage Ratio 8.31 7.51 7.37 7.32 6.71 1.
Shareholders’ Equity and Regulatory Capital Table 22 December 31, (dollars in thousands) 2025 2024 2023 2022 2021 Change in Shareholders ’ Equity Net Income $ 205,902 $ 149,994 $ 171,202 $ 225,804 $ 253,372 Cash Dividends Paid on Common Shares (112,956) (112,313) (111,795) (112,557) (110,633) Cash Dividends Paid on Preferred Shares (21,077) (12,644) (7,877) (7,877) (2,975) Dividend Reinvestment Program 4,106 4,246 4,535 4,680 4,835 Preferred Stock Issued, Net — 160,614 — — 175,487 Common Stock Repurchased Under Share Repurchase Program (5,001) — (9,854) (49,842) (27,339) Equity Compensation Plan Common Stock Repurchases (3,773) (5,302) (4,436) (5,221) (3,919) Other 1 116,237 68,937 55,472 (349,603) (51,724) Increase (Decrease) in Shareholders ’ Equity $ 183,438 $ 253,532 $ 97,247 $ (294,616) $ 237,104 Regulatory Capital Total Common Shareholders ’ Equity $ 1,506,212 $ 1,322,774 $ 1,238,756 $ 1,141,508 $ 1,436,124 Adjustments: CECL Transitional Amount — 2,375 4,749 7,124 9,498 Goodwill, Net of Deferred Tax Liabilities (28,746) (28,746) (28,746) (28,746) (28,747) Deferred Tax Assets from Tax Credit Carryforwards (2,191) — — — — Postretirement Benefit Liability Adjustments 20,253 23,396 23,261 25,078 33,496 Net Unrealized Losses on Investment Securities, Net of Tax 2 224,185 319,993 373,427 409,579 32,886 Other 9,097 9,097 198 198 198 Common Equity Tier 1 Capital 1,728,810 1,648,889 1,611,645 1,554,741 1,483,455 Preferred Stock, Net of Issuance Cost 336,101 336,101 175,487 175,487 175,487 Tier 1 Capital 2,064,911 1,984,990 1,787,132 1,730,228 1,658,942 Allowable Reserve for Credit Losses 148,404 148,634 148,400 145,202 153,001 Total Regulatory Capital $ 2,213,315 $ 2,133,624 $ 1,935,532 $ 1,875,430 $ 1,811,943 Risk-Weighted Assets $ 14,246,238 $ 14,225,908 $ 14,226,780 $ 14,238,798 $ 12,236,805 Key Regulatory Capital Ratios Common Equity Tier 1 Capital Ratio 12.14 % 11.59 % 11.33 % 10.92 % 12.12 % Tier 1 Capital Ratio 14.49 13.95 12.56 12.15 13.56 Total Capital Ratio 15.54 15.00 13.60 13.17 14.81 Tier 1 Leverage Ratio 8.57 8.31 7.51 7.37 7.32 1.
Table 15 presents a sensitivity analysis of a 25 basis point change in discount rates to the pension and postretirement benefit plan’s net periodic benefit cost and benefit obligations: Discount Rate Sensitivity Analysis Table 15 Impact of Base Discount Rate Discount Rate 25 Basis Point Increase Discount Rate 25 Basis Point Decrease (dollars in thousands) Pension Benefits Postretirement Benefits Pension Benefits Postretirement Benefits Pension Benefits Postretirement Benefits 2024 Net Periodic Benefit Cost 5.44 % 5.51 % $ 18 $ (52 ) $ (23 ) $ 52 Benefit Plan Obligations as of December 31, 2024 5.67 % 5.74 % (1,412 ) (569 ) 1,440 583 Estimated 2025 Net Periodic Benefit Cost 5.67 % 5.74 % 16 (49 ) (20 ) 49 See Note 14 in Item 8.
Table 15 presents a sensitivity analysis of a 25-basis point change in discount rates to the pension and postretirement benefit plan’s net periodic benefit cost and benefit obligations: Discount Rate Sensitivity Analysis Table 15 Impact of Base Discount Rate Discount Rate 25 Basis Point Increase Discount Rate 25 Basis Point Decrease (dollars in thousands) Pension Benefits Postretirement Benefits Pension Benefits Postretirement Benefits Pension Benefits Postretirement Benefits 2025 Net Periodic Benefit Cost 5.67 % 5.74 % $ 16 $ (49) $ (20) $ 49 Benefit Plan Obligations as of December 31, 2025 5.40 % 5.62 % (1,361) (574) 1,387 588 Estimated 2026 Net Periodic Benefit Cost 5.40 % 5.62 % 19 (49) (23) 49 See Note 13 in Item 8.
We pay particular attention to the +/-200 basis point shock sensitivities, as we believe they represent a more realistic range of rate movements that could occur in the near to medium term. For the year ended December 31, 2024, we remained within applicable guidelines for such scenarios.
We pay particular attention to the rate shock sensitivities within the range of +/-200 basis points, as we believe this range represents the highest probability of rate movements that could occur in the near to medium term. For the year ended December 31, 2025, we remained within applicable guidelines for such scenarios.
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 16 December 31, (dollars in thousands) 2024 2023 2022 2021 2020 Non-Performing Assets Non-Accrual Loans and Leases Commercial Commercial and Industrial $ 4,627 $ 39 $ 37 $ 243 $ 441 Commercial Mortgage 2,450 2,884 3,309 8,205 8,527 Total Commercial 7,077 2,923 3,346 8,448 8,968 Consumer Residential Mortgage 5,052 2,935 4,239 3,305 3,223 Home Equity 4,514 3,791 4,022 4,881 3,958 Total Consumer 9,566 6,726 8,261 8,186 7,181 Total Non-Accrual Loans and Leases 16,643 9,649 11,607 16,634 16,149 Foreclosed Real Estate 2,657 2,098 1,040 2,332 2,332 Total Non-Performing Assets $ 19,300 $ 11,747 $ 12,647 $ 18,966 $ 18,481 Accruing Loans and Leases Past Due 90 Days or More Consumer Residential Mortgage 3,984 3,814 2,429 3,159 5,274 Home Equity 2,845 1,734 1,673 3,456 3,187 Automobile 776 399 589 729 925 Other 677 648 683 426 1,160 Total Consumer 8,282 6,595 5,374 7,770 10,546 Total Accruing Loans and Leases Past Due 90 Days or More $ 8,282 $ 6,595 $ 5,374 $ 7,770 $ 10,546 Restructured Loans on Accrual Status and Not Past Due 90 Days or More $ 36,568 $ 28,651 $ 43,658 $ 60,519 $ 68,065 Total Loans and Leases $ 14,075,980 $ 13,965,026 $ 13,646,420 $ 12,259,076 $ 11,940,020 Ratio of Non-Accrual Loans and Leases to Total Loans and Leases 0.12 % 0.07 % 0.09 % 0.14 % 0.14 % Ratio of Non-Performing Assets to Total Loans and Leases and Foreclosed Real Estate 0.14 % 0.08 % 0.09 % 0.15 % 0.15 % Ratio of Non-Performing Assets to Total Assets 0.08 % 0.05 % 0.05 % 0.08 % 0.09 % Ratio of Commercial Non-Performing Assets to Total Commercial Loans and Leases and Commercial Foreclosed Real Estate 0.12 % 0.05 % 0.06 % 0.17 % 0.18 % Ratio of Consumer Non-Performing Assets to Total Consumer Loans and Leases and Consumer Foreclosed Real Estate 0.15 % 0.11 % 0.11 % 0.14 % 0.14 % Ratio of Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More to Total Loans and Leases and Foreclosed Real Estate 0.20 % 0.13 % 0.13 % 0.22 % 0.24 % Table 17 presents the activity in Non-Performing Assets (“NPAs”) for 2024: (dollars in thousands) Table 17 Balance at Beginning of Year $ 11,747 Additions 14,664 Reductions Payments (3,207 ) Return to Accrual Status (2,192 ) Charge-offs/Write-downs (1,712 ) Total Reductions (7,111 ) Balance at End of Year $ 19,300 NPAs consist of non-accrual loans and leases and foreclosed real estate.
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 16 December 31, (dollars in thousands) 2025 2024 2023 2022 2021 Non-Performing Assets Non-Accrual Loans and Leases Commercial Commercial Mortgage $ 2,085 $ 2,450 $ 2,884 $ 3,309 $ 8,205 Commercial and Industrial 1,940 4,627 39 37 243 Total Commercial 4,025 7,077 2,923 3,346 8,448 Consumer Residential Mortgage 5,382 5,052 2,935 4,239 3,305 Home Equity 4,469 4,514 3,791 4,022 4,881 Total Consumer 9,851 9,566 6,726 8,261 8,186 Total Non-Accrual Loans and Leases 13,876 16,643 9,649 11,607 16,634 Foreclosed Real Estate 295 2,657 2,098 1,040 2,332 Total Non-Performing Assets $ 14,171 $ 19,300 $ 11,747 $ 12,647 $ 18,966 Accruing Loans and Leases Past Due 90 Days or More Consumer Residential Mortgage $ 8,834 $ 3,984 $ 3,814 $ 2,429 $ 3,159 Home Equity 2,152 2,845 1,734 1,673 3,456 Automobile 520 776 399 589 729 Other 753 677 648 683 426 Total Consumer 12,259 8,282 6,595 5,374 7,770 Total Accruing Loans and Leases Past Due 90 Days or More $ 12,259 $ 8,282 $ 6,595 $ 5,374 $ 7,770 Total Loans and Leases $ 14,082,050 $ 14,075,980 $ 13,965,026 $ 13,646,420 $ 12,259,076 Ratio of Non-Accrual Loans and Leases to Total Loans and Leases 0.10% 0.12% 0.07% 0.09% 0.14% Ratio of Non-Performing Assets to Total Loans and Leases and Foreclosed Real Estate 0.10% 0.14% 0.08% 0.09% 0.15% Ratio of Non-Performing Assets to Total Assets 0.06% 0.08% 0.05% 0.05% 0.08% Ratio of Commercial Non-Performing Assets to Total Commercial Loans and Leases and Commercial Foreclosed Real Estate 0.07% 0.12% 0.05% 0.06% 0.17% Ratio of Consumer Non-Performing Assets to Total Consumer Loans and Leases and Consumer Foreclosed Real Estate 0.13% 0.15% 0.11% 0.11% 0.14% Ratio of Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More to Total Loans and Leases and Foreclosed Real Estate 0.19% 0.20% 0.13% 0.13% 0.22% Table 17 presents the activity in Non-Performing Assets (“NPAs”) for 2025: (dollars in thousands) Table 17 Balance at Beginning of Year $ 19,300 Additions 1 9,298 Reductions Payments (6,071) Return to Accrual Status (2,356) Sales of Foreclosed Real Estate (2,868) Charge-offs/Write-downs 1 (3,132) Total Reductions (14,427) Balance at End of Year $ 14,171 1.
The following table presents an estimate of the change in EVE that would result from an immediate change in interest rates, moving in a parallel fashion over the entire yield curve, relative to the measured base case scenario. Similar to the sensitivity profile above, the base case scenario assumes the consolidated statements of condition and interest rates are generally unchanged.
The following table presents an estimate of the change in EVE that would result from an immediate change in interest rates, moving in a parallel fashion over the entire yield curve, relative to the measured base case scenario.
Commercial mortgage loans are secured by first mortgages on commercial real estate at loan-to-value ratios generally not exceeding 75%. Commercial properties are well diversified among property types, including and primarily multi-family, industrial, retail and lodging.
Commercial mortgage and construction loans are offered to real estate investors, developers, and builders primarily domiciled in Hawaiʻi. Commercial mortgage loans are secured by first mortgages on commercial real estate at loan-to-value ratios generally not exceeding 75%. Commercial properties are well diversified among property types, with primary concentrations in multi-family, industrial, retail and lodging.

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