BANK OF HAWAII CORP
For the period ended Dec 31, 2025. Filed Feb 24, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 24, 2026
BOH$69.64-0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-04.
0000950170-25-031193
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-24.
0000046195-26-000015
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 227 previous paragraphs and 232 current paragraphs.
127 unchanged; 64 reworded; 41 added; 32 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 25 previous and 23 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (41)
Current report
Critical Accounting Estimates
Current report
As of December 31, 2025, Hawai‘i’s economy faces a challenging environment though conditions have been less severe than earlier anticipated. Tourism continues to soften, with declines in the U.S. mainland market and ongoing weakness in international arrivals, despite modest gains from Japan and Maui’s gradual recovery. Construction remains a key source of stability, supported by major federal contracts and infrastructure projects helping to offset weakness in other sectors. The recent increase in the state minimum wage has boosted incomes for lower-wage workers, however, inflationary pressures continue to build as tariff costs pass through to consumer prices. Federal employment reductions and the 2025 government shutdown have added strain, yet Hawai‘i’s unemployment rate remains low relative to national levels. Hawai‘i’s unemployment rate was 2.2% in December 2025, which was below the U.S. unemployment rate of 4.4%.
Current report
•Net interest income was $537.5 million in 2025, an increase of $71.0 million compared to the prior year.
Current report
•Net interest margin was 2.45% in 2025, an increase of 29 basis points from the prior year.
Current report
•Noninterest income was $179.1 million in 2025, an increase of 3.8% from the prior year, which included an $18.1 million gain related to the sale of our merchant services portfolio partially offset by a $16.8 million loss on the sale of investments in connection with the repositioning of our investment securities portfolio.
Current report
•Noninterest expense was $443.1 million in 2025, an increase of 3.0% compared to the prior year.
Current report
•Total assets were $24.2 billion as of December 31, 2025, an increase of 2.4% from the prior year.
Current report
•Total deposits were $21.2 billion as of December 31, 2025, an increase of 2.7% from the prior year.
Current report
•Total shareholders’ equity was $1.9 billion as of December 31, 2025, an increase of 11.0% from the prior year.
Current report
•We maintained a quarterly dividend of $0.70 per common share throughout 2025 and 2024.
Current report
The average balances of our interest-bearing liabilities increased by $233.7 million or 1% in 2025 compared to the prior year due to an increase in savings deposits. As compared to the same period last year, the cost of our interest-bearing liabilities decreased by 33 basis points during the year ended December 31, 2025, primarily due to a decrease in the prevailing interest rate environment, which was driven by 175 basis points of interest rate cuts by the Federal Open Market Committee from September 2024 through December 2025.
Current report
Fees, exchange, and other service charges decreased by $0.9 million or 1.6% in 2025 compared to the prior year, primarily due to the sale of our merchant services portfolio in October 2025 partially offset by an increase in fees generated from our commercial mortgage portfolio. The noninterest income generated from our merchant services portfolio during the years ended December 31, 2025 and 2024 was $8.7 million and $11.3 million, respectively.
Current report
Investment securities losses increased by $15.9 million or 211.6% in 2025 compared to the prior year, primarily due to a $16.8 million realized loss on the sale of certain securities in connection with the repositioning of $208.4 million AFS securities during the quarter ended December 31, 2025.
Current report
Other income increased by $19.8 million or 100.3% in 2025 compared to the prior year. The increase was primarily due to a one-time gain of $18.1 million as we sold the economic interests of our merchant services portfolio during the quarter ended December 31, 2025.
Current report
Total salaries and benefits expense increased by $16.2 million or 7.0% in 2025 compared to the prior year primarily due to increases in base salaries, which is generally attributable to increases in merit, incentive compensation attributed to our improved financial performance during the year, and separation expense.
Current report
Data processing expense increased by $2.4 million or 12.5% in 2025 compared to the prior year primarily due to an increase in data services fees related to the additional costs incurred in connection with outsourcing.
Current report
Professional fees expense decreased by $3.1 million or 16.0% in 2025 compared to the prior year primarily due to a decrease in consulting and outsourcing costs incurred.
Current report
FDIC insurance expense decreased by $6.7 million or 37.4% in 2025 compared to the prior year, primarily due to a partial reduction of the FDIC special assessment in 2025.
Current report
Total other expense increased by $4.6 million or 8.0% in 2025 compared to the prior year primarily due to a $1.1 million donation to the Bank of Hawaii Foundation, and an increase in pension and post-retirement expenses, telephone charges, travel expenses, and broker’s charges, partially offset by a decrease in merchant transactions and card processing fees.
Current report
In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, 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. We have evaluated the impact of the OBBBA and do not expect any material changes to our effective tax rate or results of operations.
Current report
Net income decreased by $11.1 million or 9% in 2025 compared to the prior year, primarily due to an increase in noninterest expense and a decrease in net interest income. This was partially offset by an increase in noninterest income. Noninterest expense increased by $9.7 million or 3%, primarily due to higher salaries and benefits expenses, mobile and online banking platform costs, operational losses, card production costs, temporary service expenses, and allocated administrative and support unit costs. Net interest income decreased by $7.2 million or 2%, primarily due to lower deposit spreads on higher deposit balances. Noninterest income increased by $1.4 million or 1%, primarily due to increases in trust and asset management income, monthly service fees, overdraft fees, and credit card commissions, partially offset by a decrease in mortgage banking income.
Current report
Net income increased by $22.7 million or 19% in 2025 compared to the prior year, primarily due to an increase in net interest income and noninterest income, and a decrease in noninterest expense. Net interest income increased by $13.6 million or 6%, primarily due to an increase in loan balances, primarily in commercial mortgages, as well as a net increase in allocated interest income related to increases in balances and spreads on interest-bearing and savings deposits, partially offset by a decline in noninterest-bearing deposit balances and allocated interest income. Noninterest income increased by $18.3 million or 64%, primarily due to a one-time payment on the sale of the Bank’s merchant services portfolio in the fourth quarter, higher customer derivative program revenue, loan and commitment fees, analyzed deposit account fees and a one-time gain on sale of leased assets, partially offset by a reduction in merchant revenues and terminal rentals due to the sale of the portfolio. Noninterest expense decreased by $0.6 million or 1%, primarily due to lower merchant transaction processing fees, salaries and benefits, occupancy and equipment expenses, and fewer operational losses in the period, partially offset by increases in data processing, professional services, and allocated administrative, support unit and branch expenses.
Current report
Net loss decreased by $44.3 million or 45% in 2025 compared to the prior year, primarily due to a decrease in net interest expense, partially offset by a decrease in noninterest income and an increase in noninterest expense. Net interest expense decreased by $64.5 million or 97%, primarily due to lower funding costs and an increase in interest income from higher asset yields. Noninterest income decreased by $13.1 million or 143%, primarily due to a loss on sale of $208.4 million of investment securities in conjunction with the fourth quarter portfolio repositioning transaction, partially offset by increases in other income and bank-owned life insurance income. The provision for credit losses and income taxes in this business segment represents the residual amounts to arrive at the total amount for the Company.
Current report
Cash and Cash Equivalents
Current report
Cash and cash equivalents were $946.5 million as of December 31, 2025, an increase of $182.9 million or 24.0% from the prior year. The increase was primarily due to a net increase in deposits partially offset by an increase in our investment portfolio.
Current report
The carrying value of our investment securities portfolio was $7.8 billion and $7.3 billion as of December 31, 2025 and 2024, respectively. The increase was primarily due to the purchase of $1.3 billion in available-for-sale investment securities during the year ended December 31, 2025, of which $392.9 million were floating rate securities. The increase was partially offset by the amortization of existing securities.
Current report
Mortgage-backed securities issued by Ginnie Mae, Fannie Mae, and Freddie Mac continue to be the largest concentrations in the portfolio. As of December 31, 2025, the issuers of these securities carry credit ratings equivalent to those of the U.S. Government, reflecting the explicit and/or implicit guarantees provided, and have a long history of zero credit loss.
Current report
Commercial loans and leases were $6.1 billion as of December 31, 2025, a decrease of $38.5 million or 0.6% from the prior year, primarily due to our commercial and industrial and construction portfolios amortizing and paying down at a faster rate than new loan production.
Current report
Consumer loans and leases were $8.0 billion as of December 31, 2025, an increase of $44.6 million or 0.6% from the prior year, primarily due to higher new loan originations within our residential mortgages.
Current report
Loans and Leases - Commercial
Current report
Loans and Leases - Consumer
Current report
Amount includes adjustable rate loans of $2.4 billion that are still in their fixed rate period.
Current report
Total deposits were $21.2 billion as of December 31, 2025, an increase of $555.5 million or 2.7% from the prior year. Consumer deposits increased by $68.8 million due to increases of $185.2 million in savings deposits and $47.2 million in noninterest-bearing deposits, partially offset by a decrease of $163.6 million in time deposits and interest-bearing demand deposits. Commercial deposits increased by $297.7 million primarily from an increase of $349.2 million in noninterest-bearing deposits, interest-bearing demand deposits, and time deposits, partially offset by a decrease of $51.5 million in savings. Public and other deposits increased by $188.9 million due to an increase of $242.5 million in savings and $158.6 million in interest-bearing demand deposits, partially offset by a decrease of $201.8 million in time deposits and $10.4 million in noninterest-bearing deposits.
Current report
The increase in Regular Savings was primarily due to increases in public deposits of $242.5 million, consumer deposits of $200.9 million, and commercial deposits of $5.7 million. The decrease in Money Market was primarily due to decreases in commercial deposits of $57.2 million and consumer deposits of $15.7 million.
Current report
Within our commercial and industrial loan portfolio are loans made to non-depository financial institutions (“NDFIs”). NDFIs encompass a wide range of financial entities that provide services similar to those of traditional banking institutions, but do not accept deposits from the general public and are not regulated by the federal banking agencies. As of December 31, 2025 and 2024, total loans to NDFIs were $80.8 million and $136.0 million, representing less than 1.0% of total loans and leases in both years.
Current report
Excludes loans that are fully charged off and placed on non-accrual status during the same period.
Current report
Based on our net interest income simulation as of December 31, 2025, net interest income is expected to increase as interest rates rise. Rising interest rates drive higher income from floating rate loans, investment securities and interest rate swaps, as well as higher reinvestment yields on cash flows. Conversely, declining interest rates cause floating rate loans and investment yields to fall, income on interest rate swaps to decline and cash flows to be reinvested at lower rates. In addition, deposits are assumed to reprice lower than 100% beta, causing interest expense to change less rapidly than market rate changes.
Current report
Compared with prior year, NII sensitivity over the next 12 months at December 31, 2025 generally increased in dollar amount, but decreased as a percentage of base. This shift in sensitivity profile was due to several factors including: higher base NII in 2025, an $800 million reduction in active pay-fixed swaps, the implementation of new deposit pricing models with asymmetric beta to rising and falling rate scenarios, and deposit rates hitting floors in the -300 and -400 basis points shock at current lower rate levels.
Current report
Compared to December 31, 2024, EVE sensitivity decreased in the rising rate scenarios and increased in the falling rate scenarios. We implemented new deposit pricing and attrition models during the period, which updated the repricing beta and average life assumptions, and lowered deposit account duration compared to the prior deposit models. This is partially offset by a reduction in the notional balance of active pay-fixed interest rate swaps. These factors resulted in generally lower liability duration, partially offset by higher asset duration, resulting in improved EVE modeling results.
Current report
Includes unrealized gains and losses related to the Company’s reclassification of AFS investment securities to the HTM category.
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Removed paragraphs (32)
Previous report
Critical Accou nting Estimates
Previous report
Global economic conditions remain broadly favorable for the local economy. The Maui economy continues its gradual post-wildfire recovery while the visitor industry for the rest of the Hawaiʻi is expected to operate at a high level. Due to the weak yen, the Japanese visitor market continues to recover slowly. Considering the ongoing recovery efforts on Maui and weaker Japanese yen, visitor arrivals to Hawaiʻi are expected to have moderate growth in 2025.
Previous report
The economic environment in Hawaiʻi remained stable with the unemployment rate slightly increasing from 2.9% in December 2023 to 3.0% in December 2024, which was below the U.S. unemployment rate of 4.1%. For the State overall, job growth is expected to expand in 2025 with the main drivers in construction, real estate, and the continued recovery of tourism.
Previous report
Net interest income was $466.6 million in 2024, a decrease of $30.4 million compared to the prior year. The decrease was primarily due to higher funding costs, partially offset by higher earning asset yields. The net interest margin was 2.16% in 2024, a decrease of 8 basis points from the prior year.
Previous report
Noninterest income was $172.5 million in 2024, a decrease of 2% from the prior year.
Previous report
Noninterest expense was $430.1 million in 2024, a decrease of 1.7% compared to the prior year.
Previous report
Total assets were $23.6 billion as of December 31, 2024, a decrease of 0.6% from the prior year.
Previous report
Total deposits were $20.6 billion as of December 31, 2024, a decrease of 2% from the prior year.
Previous report
Total shareholders’ equity was $1.7 billion as of December 31, 2024, an increase of 18% from the prior year due to the issuance of Series B Preferred Stock in the second quarter of 2024.
Previous report
The average balances of our interest-bearing liabilities decreased by $178.0 million or 1% in 2024 compared to the prior year due to the termination of $1.2 billion in FHLB advances during the third quarter of 2023 and the termination of $625.0 million in repurchase agreements ($575.0 million in the third quarter of 2023 and $50.0 million in the second quarter of 2024). This decrease was partially offset by an increase in our interest-bearing deposits. The cost of our interest-bearing liabilities in 2024 increased by 55 basis points compared to the prior year, primarily driven by customer migration from non-interest bearing and low yield deposit accounts to higher rate deposit products. The cost of our interest-bearing deposits increased by 69 basis points in 2024 compared to the prior year.
Previous report
Bank-owned life insurance increased by $1.9 million or 17% in 2024 compared to the prior year primarily due to an increase in the yield on the underlying assets in 2024.
Previous report
Investment securities losses, net, decreased by $3.9 million in 2024 compared to the prior year primarily due to $4.6 million net losses on sales of investment securities in 2023, partially offset by higher fees paid to counterparties for Visa Class B share conversion rate expense during 2024.
Previous report
Other noninterest income decreased by $17.4 million or 47% in 2024 compared to the prior year primarily due to a $14.7 million gain on the extinguishments of repurchase agreements during 2023 coupled with a decrease in customer derivative fees earned during 2024 as compared to the prior year.
Previous report
Total salaries and benefits decreased by $1.5 million or 1% in 2024 compared to the prior year primarily due to a decrease in separation expense coupled with a decrease in payroll taxes and share-based compensation, partially offset by an increase in incentive compensation expense and medical, dental, and life insurance expense.
Previous report
Professional fees expense increased by $1.9 million or 11% in 2024 compared to the prior year primarily due to an increase in consulting fees and various outsourced support functions related to enhancing our risk management efforts.
Previous report
FDIC insurance expense decreased by $10.5 million or 37% in 2024 compared to the prior year, primarily due to a decrease in the industry-wide FDIC special assessment. We recorded a charge of $1.9 million in 2024 compared to a $14.7 million charge in 2023 in connection with the special assessment. This special assessment was designed to recover the losses to the Deposit Insurance Fund arising from the protection of uninsured depositors following the closures of Silicon Valley Bank, Signature Bank and First Republic Bank. The collection of the special assessment started in the second quarter of 2024 and will be paid in eight quarterly installments.
Previous report
Total other expense decreased by $0.8 million or 1% in 2024 compared to the prior year primarily due to lower broker's charges as a result of fewer customer swaps in 2024 as compared to 2023.
Previous report
Net income increased by $2.1 million or 2% in 2024 compared to the prior year, primarily due an increase in noninterest income, partially offset by an increase in the provision for credit losses. Noninterest income increased by $8.2 million or 6% in 2024 compared to the prior year, primarily due to higher trust and asset management fees, overdraft fees, shareholder servicing fees, annuity and insurance fees, and debit card fees. The provision for credit losses increased by $4.2 million or 54% in 2024 compared to the prior year, primarily due to higher net charge-offs in the installment, home equity, auto and residential loan portfolios.
Previous report
Net income decreased by $4.4 million or 4% in 2024 compared to the prior year, primarily due to a decrease in net interest income and noninterest income, partially offset by a decrease in noninterest expense. Net interest income decreased by $3.0 million or 1% in 2024 compared to the prior year, primarily due to lower allocated interest income as a result of a decline in the average balance of commercial deposits, including noninterest bearing balances, partially offset by growth in the commercial and industrial and construction loan portfolios. Noninterest income decreased by $4.2 million or 13% in 2024 compared to the prior year, primarily due to a decrease in customer derivative fees, letter of credit fees, and certificate of deposit breakage fees. This decrease was partially offset by increases in account analysis fees, loan fees, and fees earned on money market sweep balances. Noninterest expense decreased by $3.1 million or 4% in 2024 compared to the prior year, primarily due to a decrease in allocated administrative and support unit expenses, salaries and benefits, and broker charges related to the customer derivative program. This decrease was partially offset by an increase in operational losses, merchant processing fees, allocated rent, and software licensing fees.
Previous report
Net income decreased by $18.9 million or 24% in 2024 compared to the prior year, primarily due to lower net interest income and noninterest income, partially offset by lower noninterest expense. Net interest income decreased by $25.3 million or 24% in 2024 compared to the prior year as a result of higher interest-bearing deposit rates, partially offset by higher earning asset yields. Noninterest income decreased by $8.0 million or 47% in 2024 compared to the prior year, primarily due to a $14.7 million gain on the extinguishment of repurchase agreements reported above, which was partially offset by a $4.7 million net loss related to investment securities sales in the prior year. Noninterest expense decreased by $3.9 million or 20% in 2024 compared to the prior year, primarily due to a decrease in the industry-wide FDIC special assessment. The provision for income taxes in this business segment represents the residual amount to arrive at the total tax expense for the Company.
Previous report
As of December 31, 2024, our investment securities portfolio was comprised of securities with an average remaining duration of approximately 4.83 years, which does not consider the impact of the interest rate swaps that hedge a portion of our available-for-sale portfolio.
Previous report
Mortgage-backed securities issued by Ginnie Mae, Fannie Mae, and Freddie Mac continue to be the largest concentrations in the portfolio. As of December 31, 2024, these mortgage-backed securities were all AAA-rated, with a low probability of a change in their credit ratings in the near future. As of December 31, 2024, our available-for-sale investment securities portfolio was comprised of securities with an average remaining duration of approximately 3.03 years, which does not consider the impact of the interest rate swaps that hedge a portion of our available-for-sale portfolio.
Previous report
December 31, 2024 and 2023, respectively. The increase in gross unrealized losses were primarily due to an increase in rates year over year.
Previous report
Total loans and leases were $14.1 billion as of December 31, 2024. This represents a $111.0 million or 1% increase from the prior year, due to growth in the commercial loan and lease portfolio.
Previous report
Commercial loans and leases were $6.1 billion as of December 31, 2024, an increase of $347.9 million or 6% from the prior year primarily due to increased loan production within our commercial mortgage portfolio. Commercial mortgage loans increased by $271.6 million or 7% from the prior year due to increased demand for funding.
Previous report
Consumer loans and leases were $8.0 billion as of December 31, 2024, a decrease of $237.0 million or 3% from the prior year primarily due to declines in our home equity and automobile portfolios. Home equity decreased by $99.3 million or 4% from the prior year as a result of paydowns and fewer new originations. Automobile loans decreased by $73.7 million or 9% from the prior year as a result of slower sales, increased competition and slowdown in production.
Previous report
Total deposits were $20.6 billion as of December 31, 2024, a $422.0 million or 2% decrease from the prior year. This decrease was primarily due to a decrease in commercial and public and other deposits. Commercial deposits decreased by $301.6 million or 4%, due to decreases of $258.2 million in core deposits, defined as all deposits exclusive of time deposits and a decrease of $43.4 million in time deposits. Public and other deposits decreased by $198.3 million or 9%, due to a decrease of $114.4 million in time deposits and $83.9 million in core deposits. Consumer deposits remained relatively unchanged from the prior year.
Previous report
Estimated uninsured deposits are calculated pursuant to regulatory guidance and reported in our Call Report and include deposits collateralized by government-backed securities and intercompany deposits of wholly-owned subsidiaries. The table below presents a reconciliation of our estimated uninsured deposits reported in our Call Report to our adjusted uninsured deposits. We believe the adjusted uninsured deposits reconciliation provides useful information about our deposits at risk.
Previous report
Table 14 presents the composition of our securities sold under agreements to repurchase.
Previous report
Commercial and Industrial non-accrual loans increased by $4.6 million from the prior year, primarily due to the addition of three loans during 2024. The three loans added during 2024 were attributed to one primary borrower.
Previous report
Based on our net interest income simulation as of December 31, 2024, net interest income is expected to increase as interest rates rise. Rising interest rates would drive higher rates on floating rate loans and investment securities, as well as higher reinvestment rates on loan and investment securities cashflows. However, lower interest rates would likely cause an initial decline in net interest income as lower rates would lead to lower yields on loans and investment securities, as well as drive higher premium amortization on existing investment securities. Based on our net interest income simulation as of December 31, 2024, NII sensitivity to changes in interest rates for the twelve months subsequent to December 31, 2024, was less sensitive in comparison to the sensitivity profile for the twelve months subsequent to December 31, 2023. Year-over-year NII sensitivity decreased primarily due to an increase in assumed deposit repricing sensitivity.
Previous report
EVE sensitivity year-over-year was largely unchanged.
Reworded paragraphs (64)
Previous wording
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 …
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Current wording
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 busi…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
The risks and uncertainties that could cause actual results to differ materially from our historical experience and our expectations and projections include but are not limited to those described in Item 1A. “Risk Factors,” Item 7. “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. 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.
Current wording
The risks and uncertainties that could cause actual results to differ materially from our historical experience and our expectations and projections include but are not limited to those described in Item 1A. “Risk Factors,” Item 7. “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. 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.
Previous wording
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 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.
Current wording
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.
Previous wording
The historical loss experience for the consumer portfolio segment is primarily determined using a Vintage method. 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. 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.
Current wording
The historical loss experience for the consumer portfolio segment is primarily determined by using a Vintage method. 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. 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.
Previous wording
We also incorporate a reasonable and supportable (“R&S”) loss forecast period, which is currently one year, to account for the effect of forecasted economic conditions and other factors on the performance of the loan portfolios, which could differ from historical loss experience. 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. 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.
Current wording
We also incorporate a reasonable and supportable (“R&S”) loss forecast period, which is currently one year, to account for the effect of forecasted economic conditions and other factors on the performance of the loan portfolios, which could differ from historical loss experience. 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. 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.
Previous wording
The company utilizes the University of Hawaiʻi Economic Research Organization (“UHERO”) macroeconomic forecast that is updated quarterly based on economic conditions and events. 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.
Current wording
The company utilizes the University of Hawaiʻi Economic Research Organization (“UHERO”) macroeconomic forecast that is updated quarterly based on economic conditions and events. 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.
Previous wording
The reserve for credit losses is generally sensitive to economic conditions and assumptions given the impact for potential losses for the consumer portfolio and risk rating migration for the commercial portfolio. For the consumer portfolio, as an example, an increase in the forecasted Hawaiʻi unemployment rate could lead to an increase in the rate of delinquencies and consequently charge-offs for consumer borrowers. 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 commercial portfolio, the impact of adverse changes in economic conditions on borrowers will vary, and generally evaluated on a case-by-case basis to include the borrower’s existing and expected financial capacity. Borrowers that would be most adversely impacted are identified as having the potential for migrating from a Pass to a Classified risk rating. 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. This sensitivity analysis is hypothetical and provided only to indicate the potential impact changes in economic conditions and assumptions may have on the Allowance estimate. Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others.
Current wording
The reserve for credit losses is generally sensitive to economic conditions and assumptions given the impact for potential losses for the consumer portfolio and risk rating migration for the commercial portfolio. For the consumer portfolio, as an example, an increase in the forecasted Hawaiʻi unemployment rate could lead to an increase in the rate of delinquencies and consequently charge-offs for consumer borrowers. 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. For the commercial portfolio, the impact of adverse changes in economic conditions on borrowers will vary, and generally evaluated on a case-by-case basis to include the borrower’s existing and expected financial capacity. Borrowers that would be most adversely impacted are identified as having the potential for migrating from a Pass to a Classified risk rating. 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. This sensitivity analysis is hypothetical and provided only to indicate the potential impact changes in economic conditions and assumptions may have on the Allowance estimate. Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others.
Previous wording
Financial assets that are recorded at fair value on a recurring basis include available-for-sale investment securities, loans held for sale, mortgage servicing rights, investments related to deferred compensation arrangements, and derivative financial instruments. 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. 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. 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.
Current wording
Financial assets that are recorded at fair value on a recurring basis include available-for-sale investment securities, loans held for sale, mortgage servicing rights, investments related to deferred compensation arrangements, and derivative financial instruments. 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. 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. 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.
Previous wording
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, 2024 and 2023, there were no Level 3 financial liabilities recorded at fair value on a recurring basis.
Current wording
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, 2025 and 2024, there were no Level 3 financial liabilities recorded at fair value on a recurring basis.
Previous wording
Management's determination of the realization of net deferred tax assets is based upon management's judgment of various future events and uncertainties, including the timing, character and amount of future income, as well as the implementation of various tax planning strategies to maximize realization of the deferred tax assets. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. As of December 31, 2024 and 2023, we carried a valuation allowance of $9.7 million and $6.7 million, respectively, related to our deferred tax assets established in connection with our low-income housing investments.
Current wording
Management’s determination of the realization of net deferred tax assets is based upon management’s judgment of various future events and uncertainties, including the timing, character and amount of future income, as well as the implementation of various tax planning strategies to maximize realization of the deferred tax assets. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. As of December 31, 2025 and 2024, we carried a valuation allowance of $13.3 million and $9.7 million, respectively, related to our deferred tax assets established in connection with our low-income housing investments.
Previous wording
We are also required to record a liability, referred to as an unrecognized tax benefit (“UTB”), for the entire amount of benefit taken in a prior or future income tax return when we determine that a tax position has a less than 50% likelihood of being accepted by the taxing authority. As of December 31, 2024 and 2023, our liabilities for UTBs were $5.3 million and $3.7 million, respectively.
Current wording
We are also required to record a liability, referred to as an unrecognized tax benefit (“UTB”), for the entire amount of benefit taken in a prior or future income tax return when we determine that a tax position has a less than 50% likelihood of being accepted by the taxing authority. As of December 31, 2025 and 2024, our liabilities for UTBs were $3.5 million and $5.3 million, respectively.
Previous wording
The volume of single-family home sales on Oahu increased 9.1% in 2024 compared to the prior year, while the volume of condominium sales on Oahu decreased 2.5% in 2024 compared to the prior year. The median price of single-family home sales and condominium sales on Oahu increased by 4.8% and 1.3%, respectively, in 2024 compared to the prior year.
Current wording
The median price of single-family home and condominium sales on Oahu increased by 3.5% and decreased by 1.5%, respectively, in 2025 compared to the prior year. The volume of single-family homes sales on Oahu increased 3.5% and condominium sales decreased 1.1% in 2025 compared to the prior year. Inventory of single-family homes and condominiums on Oahu was 2.6 months and 5.9 months, respectively, for December 2025.
Previous wording
Net income for 2024 was $150.0 million, a decrease of $21.2 million or 12% compared to the prior year. Diluted earnings per common share were $3.46 in 2024, a decrease of $0.68 or 16% compared to the prior year. Our return on average assets was 0.64% in 2024, a decrease of 7 basis points from 2023, and our return on average shareholders’ equity was 9.78% in 2024, compared to 12.63% in the prior year.
Current wording
Net income for 2025 was $205.9 million, an increase of $55.9 million, or 37.3%, compared to the prior year. Diluted earnings per common share were $4.63 in 2025, an increase of $1.17, or 33.8%, compared to the prior year. Our return on average assets was 0.87% in 2025, an increase of 23 basis points from 2024, and our return on average shareholders’ equity was 11.86% in 2025, compared to 9.78% in the prior year.
Previous wording
The return on average common equity for 2024 was 10.85% compared to 13.89% for the prior year.
Current wording
•The return on average common equity for 2025 was 13.29% compared to 10.85% for the prior year.
Previous wording
The effective tax rate for 2024 was 24.19% compared with 24.62% for the prior year.
Current wording
•The effective tax rate for 2025 was 21.41% compared with 24.19% for the prior year.
Previous wording
Total non-performing assets were $19.3 million as of December 31, 2024, an increase of $7.6 million from the prior year. The ratio of non-performing assets to total loans and leases and foreclosed real estate was 0.14% at December 31, 2024, an increase of 6 basis points from the prior year.
Current wording
•Total non-performing assets were $14.2 million as of December 31, 2025, a decrease of $5.1 million from the prior year. The ratio of non-performing assets to total loans and leases and foreclosed real estate was 0.10% at December 31, 2025, a decrease of 4 basis points from the prior year.
Previous wording
Net loan and lease charge-offs in 2024 were $12.9 million or 9 basis points of total average loans and leases outstanding. Net loan and lease charge-offs in 2024 were comprised of charge-offs of $15.0 million partially offset by recoveries of $7.2 million. 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.
Current wording
•Net loan and lease charge-offs in 2025 were $13.7 million or 10 basis points of total average loans and leases outstanding. Net loan and lease charge-offs in 2025 were comprised of charge-offs of $19.0 million partially offset by recoveries of $5.3 million. 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.
Previous wording
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. The ratio of the allowance for credit losses to total loans and leases outstanding was 1.06% at December 31, 2024, up 1 basis point from the prior year.
Current wording
•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. The ratio of the allowance for credit losses to total loans and leases outstanding was 1.04% at December 31, 2025, down 2 basis points from the prior year.
Previous wording
The investment securities portfolio was $7.3 billion as of December 31, 2024, a decrease of $0.1 billion or 1% from the prior year. The portfolio remains largely comprised of securities issued by U.S. government agencies and U.S. government-sponsored enterprises. In 2024, we purchased $470.8 million of investment securities, the majority of which were floating rate securities.
Current wording
•The investment securities portfolio was $7.8 billion as of December 31, 2025, an increase of $0.4 billion or 6.1% from the prior year. The portfolio remains largely comprised of securities issued by U.S. government agencies and U.S. government-sponsored enterprises. Floating rate securities represented 18.1% of the investment securities portfolio as of December 31, 2025, compared to 16.5% as of December 31, 2024.
Previous wording
Total loans and leases were $14.1 billion as of December 31, 2024, an increase of 1% from the prior year.
Current wording
•Total loans and leases were $14.1 billion as of both December 31, 2025 and 2024.
Previous wording
No shares of common stock were repurchased under the share repurchase program in 2024. Total remaining buyback authority under the share repurchase program was $126.0 million as of December 31, 2024.
Current wording
•During 2025, we repurchased 76,547 shares of common stock at a total cost of $5.0 million under the share repurchase program. Total remaining buyback authority under the share repurchase program was $121.0 million as of December 31, 2025.
Previous wording
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.
Current wording
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.
Previous wording
The average balances of our earning assets decreased by $532.8 million or 2% in 2024 compared to the prior year, primarily due to cashflows from the portfolio being used to reduce our interest-bearing liabilities. Yields on our investment securities portfolio increased by 4 basis points, primarily due to income earned from interest rate swaps that hedge a portion of our AFS securities portfolio partially offset by the impact of a portion of our corporate bonds portfolio converting from fixed-rate securities to lower floating-rate securities in the fourth quarter of 2023. Yields on our loan and lease portfolio increased by 46 basis points due to yield increases on our floating rate loan portfolio, higher rates on loans originated during the period, and income earned from interest rate swaps that hedge a portion of our residential mortgage portfolio.
Current wording
The average balances of our earning assets increased by $407.2 million or 2% in 2025 compared to the prior year, primarily due to increases in the average balances of available-for-sale (“AFS”) investment securities and commercial mortgage loans. Yields on our investment securities portfolio increased by 14 basis points, primarily due to the amortization of lower yielding investments being reinvested into new investments at higher interest rates. This increase was partially offset by lower income earned from interest rate swaps that hedge a portion of our AFS securities portfolio. Yields on our loan and lease portfolio increased by 6 basis points due to higher rates on home equity lines and automobile loans originated, partially offset by the payoffs of higher yielding commercial mortgage and commercial and industrial loans, and the impact of lower rates on our floating rate commercial loans.
Previous wording
The provision for income taxes was $47.9 million in 2024, a decrease of $8.1 million compared to the prior year. The effective tax rate for 2024 was 24.19%, a decrease from 24.62% for the prior year. The lower effective tax rate in 2024 compared to the prior year was primarily due to return to provision adjustments and discrete items partially offset by changes to uncertain tax positions.
Current wording
The provision for income taxes was $56.1 million in 2025, an increase of $8.2 million compared to the prior year. The effective tax rate for 2025 was 21.41%, a decrease from 24.19% for the prior year. The lower effective tax rate in 2025 compared to the prior year was primarily due to a decrease in nondeductible compensation, and increases in tax benefits related to low-income housing investments, as well as a change in discrete items.
Previous wording
Weighted-average yields on investment securities available-for-sale are based on amortized cost.
Current wording
1 Weighted-average yields on investment securities available-for-sale are based on amortized cost.
Previous wording
Information for mortgage-backed securities, collateralized mortgage obligations, and small business administration securities reflect weighted average life, including anticipated future prepayments.
Current wording
2 Information for mortgage-backed securities, collateralized mortgage obligations, and small business administration securities reflect weighted average life, including anticipated future prepayments.
Previous wording
Gross unrealized gains in our investment securities portfolio were $1.3 million and $0.7 million as of December 31, 2024 and 2023, respectively. Gross unrealized losses in the investment securities portfolio were $1.1 billion and $1.0 billion as of
Current wording
Gross unrealized gains in our investment securities portfolio were $12.0 million and $1.3 million as of December 31, 2025 and 2024, respectively. Gross unrealized losses in the investment securities portfolio were $751.9 million and $1.1 billion as of December 31, 2025 and 2024, respectively. The decrease in gross unrealized losses was primarily due to a decrease in prevailing interest rates year over year. In addition, the Company recognized $16.8 million of gross losses on sales of AFS securities during the fourth quarter of 2025 as part of a repositioning of the Company’s AFS securities portfolio.
Previous wording
The gross unrealized loss positions were primarily related to mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government and have a long history of zero credit loss. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. At December 31, 2024, we had the intent and ability to hold the investment securities that were in an unrealized loss position and it is not more likely than not that we will be required to sell the investment securities before recovery of their amortized cost basis, which may be at maturity. See Note 3 in Item 8. “Notes to Consolidated Financial Statements” for more information.
Current wording
As of December 31, 2025, we had the intent and ability to hold these securities and do not expect to be required to sell them before recovering their amortized cost basis, which may occur at maturity. See Note 2 in Item 8. “Notes to Consolidated Financial Statements” for more information.
Previous wording
The Company’s corporate bond holdings as of December 31, 2024, had a fair value of $680.0 million. Of this total, $1.2 million was fully guaranteed by the Export-Import Bank of the United States, an agency of the U.S. government, and $8.3 million was fully guaranteed by the U.S. government. Of the remaining $670.4 million of corporate bonds, all were credit-rated A- or better by at least one nationally recognized statistical rating organization.
Current wording
The Company’s corporate debt securities as of December 31, 2025, had a fair value of $744.3 million. Of this total, $8.7 million was fully guaranteed by the U.S. government. Of the remaining $735.6 million of corporate bonds, all were credit-rated A- or better by at least one nationally recognized statistical rating organization.
Previous wording
The commercial loan and lease portfolio is comprised of commercial and industrial loans, commercial mortgages, construction loans, and lease financing. Commercial and industrial loans are made primarily to corporations, middle market, and small businesses for the purpose of financing equipment acquisitions, expansion, working capital, and other general business purposes. 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, including and primarily multi-family, industrial, retail and lodging. 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.
Current wording
The commercial loan and lease portfolio is comprised of commercial mortgages, commercial and industrial loans, construction loans, and lease financing. 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. 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.
Previous wording
Construction loans are made for the purchase or construction of a property for which repayment will be generated by the property. We classify loans as construction until the completion of the construction phase. Following construction, if a loan is retained, the loan is reclassified to the commercial mortgage category. Lease financing consists of sales-type leases used by commercial customers to finance capital purchases. Although our primary market is Hawaiʻi, the commercial portfolio contains loans to some borrowers based on the U.S. Mainland, including some Shared National Credits, which have a business connection to Hawaiʻi or are associated with a Hawaiʻi customer relationship.
Current wording
Commercial and industrial loans are made primarily to corporations, middle market, and small businesses for the purpose of financing equipment acquisitions, expansion, working capital, and other general business purposes. Construction loans are made for the purchase or construction of a property for which repayment will be generated by the property. We classify loans as construction until the completion of the construction phase. Following construction, if a loan is retained, the loan is reclassified to the commercial mortgage category. Lease financing consists of sales-type leases used by commercial customers to finance capital purchases. Although our primary market is Hawaiʻi, the commercial portfolio contains loans to some borrowers based on the U.S. Mainland, including some Shared National Credits, which have a business connection to Hawaiʻi or are associated with a Hawaiʻi customer relationship.
Previous wording
Our commercial and consumer lending activities are concentrated primarily in Hawaiʻi and the West Pacific. Our commercial loan and lease portfolio to borrowers based on the U.S. Mainland includes participation in Shared National Credits.
Current wording
Our commercial and consumer lending activities are concentrated primarily in Hawai‘i and the West Pacific. Our commercial loan and lease portfolio to borrowers based on the U.S. Mainland includes participation in shared national credits for customers whose operations and assets extend beyond Hawai‘i.
Previous wording
Other assets were $737.0 million as of December 31, 2024, an increase of $95.4 million or 15% from the prior year. The increase resulted from various items. Derivative financial instruments increased by $66.4 million due to an increase in the fair value of our interest rate swaps and the strategic repositioning of our fair value hedge portfolio. Low-income housing and other equity investments increased by $24.3 million due to increased funding of existing projects. Deferred tax assets and tax receivable decreased by $11.2 million or 6.1% due to temporary differences between financial reporting and income tax basis of unrealized losses on investment securities and a decrease in federal income tax receivable. See Note 7 in Item 8. “Notes to Consolidated Financial Statements” for more information on the composition of our other assets.
Current wording
Other assets were $632.0 million as of December 31, 2025, a decrease of $104.9 million or 14% from the prior year. The fair value of derivative financial instruments decreased by $61.9 million or 38.3% due to changes in interest rates from December 2024 to December 2025, decreasing the valuation of customer swaps and fair value hedges. Deferred tax assets and tax receivable decreased by $34.1 million or 20% primarily due to temporary book-to-tax differences related to unrealized losses on investment securities. See Note 6 in Item 8. “Notes to Consolidated Financial Statements” for more information on the composition of our other assets.
Previous wording
Some of our repurchase agreements with private institutions may be terminated at earlier specified dates by either the private institution or the Company. If all such agreements were to terminate at the earliest possible date, the weighted-average maturity of our repurchase agreements with private institutions would be 0.1 years. Each of our repurchase agreements is accounted for as a collateralized financing arrangement (i.e., secured borrowing) and not as a sale and subsequent repurchase of securities. See Note 9 in Item 8. “Notes to Consolidated Statements” for more information.
Current wording
Securities sold under agreements to repurchase were $50.0 million and $100.0 million as of December 31, 2025 and December 31, 2024, respectively. In February 2025, a private institution exercised its right to call on a repurchase agreement with a balance of $50.0 million, resulting in its termination. As of December 31, 2025, our remaining repurchase agreement was at a fixed interest rate of 3.89% with a remaining maturity of 3.9 years. Our repurchase agreement was accounted for as a collateralized financing arrangement (i.e., a secured borrowing) and not as a sale and subsequent repurchase of securities. Our remaining repurchase agreement with a private institution may be terminated at earlier specified dates by either the private institution or the Company. See Note 8 in Item 8. “Notes to Consolidated Statements” for more information.
Previous wording
Other debt was $558.3 million as of December 31, 2024, a decrease of $1.9 million from the prior year. In 2023, we added a net $550.0 million of FHLB advances with a weighted-average interest rate of 4.13% and maturity dates ranging from 2026 to 2028. As of December 31, 2024, our available capacity under our line of credit with the FHLB was $1.7 billion. The FHLB borrowing capacity is secured by residential real estate loan collateral.
Current wording
Other debt was $558.2 million and $558.3 million as of December 31, 2025 and 2024, respectively. As of December 31, 2025, our available capacity under our line of credit with the FHLB was $2.1 billion. The FHLB borrowing capacity is secured by residential real estate loan collateral.
Previous wording
Retirement benefits payable were $23.8 million as of December 31, 2024, an increase of $0.1 million from the prior year. 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.
Current wording
Retirement benefits payable was $20.1 million as of December 31, 2025, a decrease of $3.6 million from the prior year. 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.
Previous wording
The Company has various contractual obligations that affect its cash flows and liquidity. Our non-cancelable operating leases and finance lease obligations are primarily related to branch premises, equipment, and a portion of the Company’s headquarters’ building with lease terms extending through 2052. 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. Actual contributions may differ from these estimates. Additional information regarding material contractual obligations is presented in Notes 9, 14, 18, 20 and 23 in Item 8. “Notes to Consolidated Financial Statements.”
Current wording
The Company has various contractual obligations that affect its cash flows and liquidity. Our non-cancelable operating leases and finance lease obligations are primarily related to branch premises, equipment, and a portion of the Company’s headquarters’ building with lease terms extending through 2052. 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. Actual contributions may differ from these estimates. Additional information regarding material contractual obligations is presented in Note 8, Note 13, Note 17, Note 19, and Note 22 in Item 8. “Notes to Consolidated Financial Statements.”
Previous wording
Commercial mortgages and construction loans are offered to real estate investors, developers, builders, and owner-occupants primarily domiciled in Hawaiʻi. These loans are secured by first mortgages on real estate at loan-to-value (“LTV”) ratios deemed appropriate based on the property type, location, overall quality, and sponsorship. Generally, these LTV ratios do not exceed 75% based on regulatory-compliant appraisals that we obtain for the underlying properties. Commercial properties are well diversified among property types, including and primarily multi-family, industrial, retail and lodging. Commercial mortgage and construction loans are substantially secured by properties located in Hawaiʻi.
Current wording
Commercial mortgages and construction loans are offered to real estate investors, developers, builders, and owner-occupants primarily domiciled in Hawaiʻi. These loans are secured by first mortgages on real estate at loan-to-value (“LTV”) ratios deemed appropriate based on the property type, location, overall quality, and sponsorship. Generally, these LTV ratios do not exceed 75% based on regulatory-compliant appraisals that we obtain for the underlying properties. Commercial properties are well diversified among property types, with primary concentrations in multi-family, industrial, retail and lodging. Commercial mortgage and construction loans are substantially secured by properties located in Hawaiʻi.
Previous wording
Residential mortgage non-accrual loans increased by $2.1 million or 72% from the prior year. 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%.
Current wording
Non-accrual loans and leases as of December 31, 2025 were $13.9 million, a decrease of $2.8 million or 17% from prior year. As of December 31, 2025, our residential mortgage non-accrual loans of $5.4 million were comprised of 18 loans with a weighted average current loan-to-value ratio of 69%. 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%.
Previous wording
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. 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.
Current wording
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. 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.
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Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
The Company’s Board of Directors declared a quarterly cash dividend of $0.70 per share on the Company’s outstanding common shares. The dividend will be payable on March 14, 2025 to shareholders of record at the close of business on February 28, 2025.
Previous report — wording carried elsewhere
Certain prior period information has been reclassified to conform to current presentation.
Previous report — wording carried elsewhere
As of December 31, 2024, securities sold under agreements to repurchase decreased by $50.5 million, or 34%, compared to the previous year. In May 2024, a private institution exercised its right to call on a repurchase agreement with a balance of $50.0 million, resulting in its termination. In November 2024, a repurchase agreement with a government entity with a balance of $0.5 million matured.
Previous report — wording carried elsewhere
Allowance for Credit Losses – Loans and Leases