BANK OF HAWAII CORP

Previous wording

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts and may include statements concerning, among other things, the anticipated economic and business environment in our service area and elsewhere, credit quality and other financial and business matters in future periods, our future results of operations and financial position, our business strategy and plans and our objectives and future operations. We also may make forward-looking statements in our other documents filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”). In addition, our senior management may provide forward-looking statements orally to analysts, investors, representatives of the media and others. 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) general economic conditions either nationally, internationally, or locally may be different than expected, and particularly, any event that negatively impacts the tourism industry in Hawaii; (2) the compounding effects of the COVID-19 pandemic, including reduced tourism in Hawaii, the duration and scope of government mandates or other limitations of or restrictions on travel, volatility in the international and national economy and credit markets, inflation, worker absenteeism, quarantines or other travel or health-related restrictions, the length and severity of the COVID-19 pandemic, the pace of recovery following the COVID-19 pandemic, and the effect of government, business and individual actions intended to mitigate the effects of the COVID-19 pandemic; (3) changes in market interest rates that may affect credit markets and our ability to maintain our net interest margin; (4) changes in our credit quality or risk profile that may increase or decrease the required level of our reserve for credit losses; (5) the impact of legislative and regulatory initiatives, particularly the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018; (6) changes to the amount and timing of proposed common stock repurchases; (7) unanticipated changes in the securities markets, public debt markets, and other capital markets in the U.S. and internationally, (8) changes in fiscal and monetary policies of the markets in which we operate; (9) the increased cost of maintaining or the Company’s ability to maintain adequate liquidity and capital, based on the requirements adopted by the Basel Committee on Banking Supervision and U.S. regulators; (10) changes in accounting standards; (11) changes in tax laws or regulations, including Public Law 115-…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts and may include statements concerning, among other things, the anticipated economic and business environment in our service area and elsewhere, credit quality and other financial and business matters in future periods, our future results of operations and financial position, our business strategy and plans and our objectives and future operations. We also may make forward-looking statements in our other documents filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”). In addition, our senior management may provide forward-looking statements orally to analysts, investors, representatives of the media and others. 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) general economic conditions either nationally, internationally, or locally may be different than expected, and particularly, any event that negatively impacts the tourism industry in Hawai‘i; (2) the compounding effects of the COVID-19 pandemic, including reduced tourism in Hawai‘i, the duration and scope of government mandates or other limitations of or restrictions on travel, volatility in the international and national economy and credit markets, inflation, worker absenteeism, quarantines or other travel or health-related restrictions, the length and severity of the COVID-19 pandemic, the pace of recovery following the COVID-19 pandemic, and the effect of government, business and individual actions intended to mitigate the effects of the COVID-19 pandemic; (3) changes in market interest rates that may affect credit markets and our ability to maintain our net interest margin; (4) changes in our credit quality or risk profile that may increase or decrease the required level of our reserve for credit losses; (5) the impact of legislative and regulatory initiatives, particularly the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018; (6) changes to the amount and timing of proposed common stock repurchases; (7) unanticipated changes in the securities markets, public debt markets, and other capital markets in the U.S. and internationally, (8) changes in fiscal and monetary policies of the markets in which we operate; (9) the increased cost of maintaining or the Company’s ability to maintain adequate liquidity and capital, based on the requirements adopted by the Basel Committee on Banking Supervision and U.S. regulators; (10) changes in accounting standards; (11) changes in tax laws or regulations, including Public Law 11…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

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 significant accounting policies we follow are presented in Note 1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Application of these principles requires us to make estimates, assumptions, and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Most accounting policies are not considered critical accounting policies by management. Several factors are considered in determining whether or not a policy is critical in the preparation of the Consolidated Financial Statements. Factors include, among other things, whether the policy requires management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and whether it is likely that materially different results would be reported under different conditions or different assumptions. The accounting policies we believe are most critical in preparing our Consolidated Financial Statements are presented in the section titled “Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no significant changes in the Company’s application of critical accounting policies since December 31, 2023.

Current wording

Our Unaudited 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 significant accounting policies we follow are presented in Note 1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Application of these principles requires us to make estimates, assumptions, and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Most accounting policies are not considered critical accounting policies by management. Several factors are considered in determining whether or not a policy is critical in the preparation of the Consolidated Financial Statements. Factors include, among other things, whether the policy requires management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and whether it is likely that materially different results would be reported under different conditions or different assumptions. The accounting policies we believe are most critical in preparing our Consolidated Financial Statements are presented in the section titled “Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no significant changes in the Company’s application of critical accounting policies since December 31, 2023.

Previous wording

We are a regional financial services company serving businesses, consumers, and governments in Hawaii, Guam, and other Pacific Islands. Our principal operating subsidiary, the Bank, was founded in 1897.

Current wording

We are a regional financial services company serving businesses, consumers, and governments in Hawai‘i, Guam, and other Pacific Islands. Our principal operating subsidiary, the Bank, was founded in 1897.

Previous wording

For the first six months of 2024, the median price of single-family home and condominium sales on Oahu increased by 3.3% and 2.0%, respectively, compared to the same period in 2023. The volume of single-family homes sales on Oahu increased 6.7% and condominium sales decreased 5.8% compared to the same period in 2023. Inventory of single-family homes and condominiums on Oahu was 3.0 months and 4.7 months, respectively.

Current wording

For the first nine months of 2024, the median price of single-family home and condominium sales on Oahu increased by 4.8% and 1.0%, respectively, compared to the same period in 2023. The volume of single-family homes sales on Oahu increased 5.8% and condominium sales decreased 5.6% compared to the same period in 2023. Inventory of single-family homes and condominiums on Oahu was 3.4 months and 5.2 months, respectively.

Previous wording

Net income for the second quarter of 2024 was $34.1 million, a decrease of $12.0 million or 26% compared to the same period in 2023. Diluted earnings per common share was $0.81 for the second quarter of 2024, a decrease of $0.31 or 28% compared to the same period in 2023.

Current wording

Net income for the third quarter of 2024 was $40.4 million, a decrease of $7.5 million or 16% compared to the same period in 2023. Diluted earnings per common share was $0.93 for the third quarter of 2024, a decrease of $0.24 or 21% compared to the same period in 2023.

Previous wording

The return on average common equity for the second quarter of 2024 was 10.41% compared with 14.95% in the same quarter of 2023.

Current wording

The return on average common equity for the third quarter of 2024 was 11.50% compared with 15.38% in the same quarter of 2023.

Previous wording

The provision for credit losses for the second quarter of 2024 and 2023 was $2.4 million and $2.5 million, respectively.

Current wording

The provision for credit losses for the third quarter of 2024 and 2023 was $3.0 million and $2.0 million, respectively.

Previous wording

We maintained a strong balance sheet during the second quarter of 2024, with what we believe are appropriate reserves for credit losses, strong liquidity and growing capital.

Current wording

We maintained a strong balance sheet during the third quarter of 2024, with what we believe are appropriate reserves for credit losses and strong capital.

Previous wording

The allowance for credit losses on loans and leases was $147.5 million as of June 30, 2024, an increase of $1.1 million from December 31, 2023. The ratio of the allowance for credit losses to total loans and leases outstanding was 1.07% at the end of the quarter, up 2 basis points from December 31, 2023.

Current wording

The allowance for credit losses on loans and leases was $147.3 million as of September 30, 2024, an increase of $0.9 million from December 31, 2023. The ratio of the allowance for credit losses to total loans and leases outstanding was 1.06% at the end of the quarter, up 1 basis point from December 31, 2023.

Previous wording

Net loan and lease charge-offs during the second quarter of 2024 were $3.4 million or 10 basis points annualized of total average loans and leases outstanding. Net loan and lease charge-offs for the second quarter of 2024 were comprised of charge-offs of $4.8 million partially offset by recoveries of $1.4 million. Compared to the same quarter of 2023, net loan and lease charge-offs increased by $2.0 million or 6 basis points annualized on total average loans and leases outstanding.

Current wording

Net loan and lease charge-offs during the third quarter of 2024 were $3.8 million or 11 basis points annualized of total average loans and leases outstanding. Net loan and lease charge-offs for the third quarter of 2024 were comprised of charge-offs of $5.3 million partially offset by recoveries of $1.5 million. Compared to the same quarter of 2023, net loan and lease charge-offs increased by $1.8 million or 5 basis points annualized on total average loans and leases outstanding.

Previous wording

Total non-performing assets ("NPAs") were $15.2 million as of June 30, 2024, up $3.4 million from December 31, 2023. NPAs as a percentage of total loans and leases and foreclosed real estate were 0.11% at the end of the quarter, up 3 basis points compared to the same quarter of 2023.

Current wording

Total non-performing assets ("NPAs") were $19.8 million as of September 30, 2024, up $8.0 million from December 31, 2023. NPAs were 14 basis points of total loans and leases and foreclosed real estate at the end of the quarter, up 6 basis points from December 31, 2023.

Previous wording

The investment securities portfolio was $7.1 billion as of June 30, 2024, a decrease of 4% from December 31, 2023. The investment portfolio remains largely comprised of securities issued by U.S. government agencies and U.S. government-sponsored enterprises.

Current wording

The investment securities portfolio was $7.3 billion as of September 30, 2024, a decrease of 2% from December 31, 2023. The investment portfolio remains largely comprised of securities issued by U.S. government agencies and U.S. government-sponsored enterprises.

Previous wording

No shares of common stock were repurchased under the share repurchase program in the second quarter of 2024. Total remaining buyback authority under the share repurchase program was $126.0 million as of June 30, 2024.

Current wording

No shares of common stock were repurchased under the share repurchase program in the third quarter of 2024. Total remaining buyback authority under the share repurchase program was $126.0 million at September 30, 2024.

Previous wording

On July 8, 2024, the Company announced that the Board of Directors declared the quarterly dividend payment of $10.94 per share, equivalent to $0.2735 per depositary share, on its preferred stock, Series A. The depositary shares representing the Series A Preferred Stock are traded on the NYSE under the symbol “BOH.PRA.” The dividend will be payable on August 1, 2024 to shareholders of record of the preferred stock as of the close of business on July 18, 2024.

Current wording

On October 4, 2024, the Company announced that the Board of Directors declared quarterly dividend payments of $10.94 per share, equivalent to $0.2735 per depositary share, on its preferred stock, Series A, and $20.00 per share, equivalent to $0.5000 per depositary share, on its preferred stock, Series B. The depositary shares representing the Series A Preferred Stock and Series B Preferred Stock are traded on the NYSE under the symbol “BOH.PRA” and “BOH.PRB”, respectively. The dividends on the Series A Preferred Stock and Series B Preferred Stock will be payable on November 1, 2024 to shareholders of record of the preferred stock as of the close of business on October 17, 2024.

Previous wording

Analysis of Stat ements of Income

Current wording

Analysis of Unaudited Stat ements of Income

Previous wording

Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 21%, of $0.8 million and $1.5 million for the three and six months June 30, 2024, and $0.5 million and $1.0 million for the three and six months ended June 30, 2023.

Current wording

Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 21%, of $1.0 million and $2.5 million for the three and nine months ended September 30, 2024, respectively, and $0.4 million and $1.4 million for the three and nine months ended September 30, 2023, respectively.

Previous wording

Yields on our investment securities portfolio increased by 7 basis points in the second quarter of 2024 and by 6 basis points in the first six months of 2024 compared to the same periods in 2023 primarily due to the income received from interest rate swaps that hedge the fair value of our AFS securities portfolio. Yields on our loan and lease portfolio increased by 57 basis points in the second quarter of 2024 and by 59 basis points in the first six months of 2024 compared to the same periods in 2023 due to an increase in yields on our floating rate loan portfolio, higher rates on loans that originated during the period, and income received from interest rate swaps that hedge the fair value of our residential mortgage portfolio.

Current wording

The average balance of our earning assets for the three and nine months ended September 30, 2024 decreased by $952.3 million or 4% and $821.0 million or 4%, respectively, compared to the same periods in 2023. These decreases were due to actions taken to reduce our wholesale and non-core funding in the third quarter of 2023 and second quarter of 2024. As compared to the same periods last year, yields on our investment securities portfolio increased by 7 and 6 basis points during the three and nine months ended September 30, 2024, respectively, primarily due to income earned from interest rate swaps that hedge a portion of our AFS securities portfolio. Yields on our loan and lease portfolio increased by 48 and 55 basis points during the three and nine months ended September 30, 2024, respectively, 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.

Previous wording

Interest rates paid on our interest-bearing liabilities increased by 66 basis points in the second quarter of 2024 and by 88 basis points in the first six months of 2024 compared to the same periods in 2023. The interest rates on interest-bearing deposits increased by 92 basis points in the second quarter of 2024 and by 110 basis points in the first six months of 2024 compared to the same periods in 2023 driven by customer migration to higher rate deposit products as a result of the higher rate environment. The rates paid on securities sold under agreements to repurchase increased by 87 basis points in the second quarter of 2024 and by 85 basis points in the first six months of 2024 compared to the same periods in 2023 due to the termination of $575.0 million in repurchase agreements during the third quarter of 2023 that had lower interest rates compared to the repurchase agreements that remain outstanding and the termination of $50 million in repurchase agreements in May 2024.

Current wording

The average balance of our interest-bearing liabilities for the three and nine months ended September 30, 2024 decreased by $696.5 million or 4% and $369.1 million or 2%, respectively, compared to the same periods in 2023 due to the termination of $1.2 billion in FHLB advances during the quarter ended September 30, 2023 and the termination of $625.0 million in repurchase agreements ($575.0 million in 2023 and $50.0 million in May 2024). As compared to the same periods last year, the cost of our interest-bearing liabilities increased by 41 and 72 basis points during the three and nine months ended September 30, 2024, respectively, primarily driven by customer migration to higher rate deposit products. The cost of our interest-bearing deposits increased by 57 basis points in the third quarter of 2024 and by 92 basis points in the first nine months of 2024 compared to the same periods in 2023.

Previous wording

Trust and asset management income is comprised of fees earned from the management and administration of trusts and other customer assets. The management fees are largely based upon the market value of the assets and the fee rate charged to customers. Total trust assets under administration were $12.3 billion and $10.7 billion as of June 30, 2024 and June 30, 2023, respectively. Trust and asset management income increased by $1.0 million or 9% in the second quarter of 2024 and by $1.5 million or 7% for the first six months of 2024 compared to the same periods in 2023 primarily due to an increase in the asset values of our customers' accounts.

Current wording

Trust and asset management income increased by $1.4 million or 13% in the third quarter of 2024 and by $2.9 million or 9% for the first nine months of 2024 compared to the same periods in 2023 primarily due to an increase in the asset values of our customers' accounts. Trust and asset management income is comprised of fees earned from the management and administration of trusts and other customer assets. These fees are largely based upon the market value of the assets and the fee rate charged to customers. Total trust assets under management were $13.0 billion and $10.6 billion as of September 30, 2024 and 2023, respectively.

Previous wording

Bank-owned life insurance increased by $0.5 million or 18% in the second quarter of 2024 and by $1.0 million or 18% for the first six months of 2024 compared to the same periods in 2023 primarily due to an increase in the yield on the underlying assets, partially offset by a decrease in the amount of death benefits received.

Current wording

Bank-owned life insurance increased by $0.8 million or 29% in the third quarter of 2024 and by $1.8 million or 21% for the first nine months of 2024 compared to the same periods last year. The increase in the third quarter was primarily due to an increase in the yield on the underlying assets coupled with an increase in death benefits. The increase for the first nine months of 2024 was primarily due to an increase in the yield on the underlying assets, partially offset by lower death benefits.

Previous wording

Total salaries and benefits expense increased by $0.9 million or 2% in the second quarter of 2024 primarily due to an increase in base salaries coupled with separation expenses, partially offset by a decrease in share-based compensation. Total salaries and benefits expense decreased by $6.0 million or 5% for the first six months of 2024 compared to the same period in 2023 mainly due to a decrease in separation expense, payroll taxes, retirement and other benefits, and medical, dental, and life insurance.

Current wording

Total salaries and benefits expense decreased by $6.2 million or 3% during the nine months ended September 30, 2024 compared to the same period last year, primarily due to a decrease in separation expense coupled with a decrease in payroll taxes and retirement and other benefits, partially offset by an increase in incentive compensation.

Previous wording

Net occupancy expense increased by $0.6 million or 6% in the second quarter of 2024 and by $1.2 million or 6% for the first six months of 2024 compared to the same periods in 2023. These increases were due to an increase in vacancies of spaces that we sublease, and an increase in common area maintenance charges assessed to us by our lessors.

Current wording

Net occupancy expense increased by $0.5 million or 5% in the third quarter of 2024 and by $1.6 million or 5% for the first nine months of 2024 compared to the same periods in 2023 due to an increase in vacancies of subleased properties and an increase in common area maintenance charges assessed by our lessors.

Previous wording

Professional fees increased by $1.1 million or 13% for the first six months of 2024 compared to the same period in 2023 primarily due to an increase in consulting fees and the outsourcing of various support functions.

Current wording

Professional fees increased by $0.9 million or 23% in the third quarter of 2024 and by $0.3 million or 2% for the first nine months of 2024 compared to the same periods in 2023 primarily due to an increase in consulting fees and various outsourced support functions.

Previous wording

FDIC insurance expense increased by $4.0 million or 126% in the second quarter of 2024 and by $4.4 million or 68% for the first six months of 2024 compared to the same periods in 2023 primarily due to an increase in an industry-wide non-recurring FDIC special assessment.

Current wording

FDIC insurance expense increased by $4.4 million or 45% for the first nine months of 2024 compared to the same period in 2023 primarily due to an increase in an industry-wide non-recurring FDIC special assessment.

Previous wording

Total other expense decreased by $1.3 million or 4% for the six months of 2024 compared to the same period in 2023. This decrease was primarily due to lower advertising expense and lower broker's charges, which was the result of fewer customer swaps during the current period.

Current wording

Total other expense decreased by $1.6 million or 4% for the first nine months ended September 30, 2024, compared to the same period in 2023 primarily due to lower broker's charges as a result of fewer customer swaps during the current period.

Previous wording

The provision for income taxes was $11.2 million in the second quarter of 2024, a decrease of $3.8 million compared to the same period in 2023. The effective tax rate for the second quarter of 2024 was 24.77%, an increase from 24.57% for the same period in 2023. The higher effective tax rate in the second quarter of 2024 compared to the same period in 2023 was primarily due to an increase in discrete items.

Current wording

The provision for income taxes was $12.3 million in the third quarter of 2024, a decrease of $3.5 million compared to the same period in 2023. The effective tax rate for the third quarter of 2024 was 23.33%, a decrease from 24.76% for the same period in 2023. The lower effective tax rate in the third quarter of 2024 compared to the same period in 2023 was primarily due to an increase in tax-exempt income.

Previous wording

The provision for income taxes was $23.2 million in the first six months of 2024, a decrease of $7.7 million compared to the same period in 2023. The effective tax rate for the first six months of 2024 was 24.76%, a decrease from 24.98% for the same period in 2023. The lower effective tax rate for the first six months of 2024 compared to the same period in 2023 was due to an increase in tax exempt income and an increase in benefits from our LIHTC investments.

Current wording

The provision for income taxes was $35.5 million in the first nine months of 2024, a decrease of $11.2 million compared to the same period in 2023. The effective tax rate for the first nine months of 2024 was 24.25%, a decrease from 24.91% for the same period in 2023. The lower effective tax rate for the first nine months of 2024 compared to the same period in 2023 was due to an increase in tax-exempt income and an increase in benefits from low-income housing investments.

Previous wording

The carrying value of our investment securities portfolio was $7.1 billion and $7.4 billion as of June 30, 2024 and December 31, 2023, respectively. The decrease is primarily due to cash flows from the portfolio not being reinvested into securities.

Current wording

The carrying value of our investment securities portfolio was $7.3 billion and $7.4 billion as of September 30, 2024 and December 31, 2023, respectively. The decrease is primarily due to cash flows from the portfolio not being reinvested into securities in the first and second quarters of 2024.

Previous wording

We continually evaluate our investment securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability, and the level of interest rate risk to which we are exposed to. These evaluations may cause us to change the level of funds we deploy into investment securities, change the composition of our investment securities portfolio, and change the proportion of investments made into the available-for-sale and held-to-maturity investment categories.

Current wording

We continually evaluate our investment securities portfolio in conjunction with our response to established asset/liability management objectives, changing market conditions that could affect profitability, and the level of interest rate risk to which we are exposed to. These evaluations may cause us to change the level of funds we deploy into investment securities, change the composition of our investment securities portfolio, and change the proportion of investments made into the AFS and HTM investment categories.

Previous wording

Gross unrealized gains in our investment securities portfolio were $0.7 million as of June 30, 2024 and December 31, 2023. Gross unrealized losses in our investment securities portfolio were $1.1 billion as of June 30, 2024, and $1.0 billion as of December 31, 2023. The gross unrealized losses were primarily related to mortgage-backed securities issued by U.S. government agencies or U.S. government-sponsored enterprises. See Note 3 to the unaudited Consolidated Financial Statements for more information.

Current wording

Net unrealized losses in our investment securities portfolio were $0.9 billion as of September 30, 2024 and $1.0 billion as of December 31, 2023. See Note 3 to the unaudited Consolidated Financial Statements for more information.

Previous wording

Consumer loans and leases as of June 30, 2024, decreased by $171.8 million or 2% from December 31, 2023. Residential mortgage loans decreased by $88.6 million or 2% from December 31, 2023, primarily due to an increase in payoffs, monthly amortization on our loan portfolio and a decrease in the fair value adjustment of the closed pool of fixed-rate residential mortgages that are designated as the hedged item for our fair value hedge instruments. Home equity portfolio decreased by $43.8 million or 2% from December 31, 2023, as a result of lower originations. Automobile loans decreased by $31.6 million or 4% from December 31, 2023, as a result of increased competition in a higher rate environment. Other consumer loans decreased by $7.9 million or 2% from December 31, 2023, due to a slowdown in new originations and continued loan paydowns, partially offset by increased lease production.

Current wording

Consumer loans and leases as of September 30, 2024 decreased by $199.0 million or 2% from December 31, 2023. Residential mortgage loans decreased by $61.5 million or 1% from December 31, 2023 primarily due to fewer loan originations in the higher rate environment. The home equity portfolio decreased by $69.0 million or 3% from December 31, 2023 as a result of paydowns and fewer loan originations. Automobile loans decreased by $50.9 million or 6% from December 31, 2023 due to fewer loan originations as a result of increased competition.

Previous wording

Our commercial and consumer lending activities are concentrated primarily in Hawaii. 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 Hawaii.

Current wording

Our commercial and consumer lending activities are concentrated primarily in Hawai‘i. 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

Low-income housing and other equity investments decreased by $3.1 million due to the amortization of existing investments. Derivative financial instruments increased by $67.0 million due to increasing fair values of our interest rate swaps impacted by prevailing interest rates. Prepaid expenses increased by $5.0 million due to the restart of prepaid insurance in the new fiscal year. Deferred compensation plan assets increased by $5.9 million mainly due to $4.5 million in contributions from plan participants during the period. Deferred tax assets and tax receivable decreased by $1.7 million due to temporary differences between financial reporting and income tax basis of unrealized losses on investment securities offset by a higher federal income tax receivable.

Current wording

Low-income housing and other equity investments increased by $12.4 million due to increased funding of existing projects. Deferred tax assets and tax receivable decreased by $19.7 million due to temporary differences between financial reporting and income tax basis of unrealized losses on investment securities and decrease in federal income tax receivable. Derivative financial instruments decreased by $20.7 million due to decreasing fair value of our interest rate swaps impacted by prevailing interest rates, partially offset by the termination of certain fair value hedges. Prepaid expenses increased by $4.1 million due to an increase in prepaid insurance and other prepaid expenses. Deferred compensation plan assets increased by $6.5 million primarily due to contributions from plan participants and net appreciation in plan assets during the period.

Previous wording

Total deposits were $20.4 billion as of June 30, 2024, a decrease of $646.6 million or 3% from December 31, 2023. Consumer deposits increased by $62.6 million due to an increase of $121.3 million in time deposits, partially offset by a decrease of $58.7 million in core deposits, which include all deposits excluding time deposits. Commercial deposits decreased by $605.6 million primarily from decreases of $499.5 million in core deposits and $106.1 million in time deposits. Public and other deposits decreased by $103.6 million due to a decrease of $171.8 million in time deposits, partially offset by an increase of $68.2 million in core deposits.

Current wording

Total deposits were $21.0 billion as of September 30, 2024, a decrease of $76.7 million or 0.4% from December 31, 2023. Consumer deposits increased by $20.7 million due to an increase of $231.1 million in time deposits, partially offset by a decrease of $210.4 million in core deposits, which include all deposits excluding time deposits. Commercial deposits decreased by $245.0 million primarily from decreases of $178.7 million in core deposits and $66.3 million in time deposits. Public and other deposits increased by $147.6 million due to an increase of $201.2 million in core deposits, partially offset by a decrease of $53.6 million in time deposits.

Previous wording

The increase in Money Market was primarily due to an increase in commercial deposits of $73.5 million partially offset by $30.1 million decrease in consumer deposits. The decrease in Regular Savings was primarily due to decreases in public deposits of $147.5 million and $17.2 million in commercial deposits, partially offset by an increase of $139.7 million in consumer deposits.

Current wording

The increase in Money Market was primarily due to an increase in commercial deposits of $372.9 million partially offset by $35.6 million decrease in consumer deposits. The increase in Regular Savings was primarily due to increases in consumer deposits of $139.1 million and $8.6 million in public deposits, partially offset by a decrease of $11.3 million in commercial deposits.

Previous wording

Securities sold under agreements to repurchase were $100.5 million and $150.5 million as of June 30, 2024 and December 31, 2023, respectively. In May 2024, a private institution exercised their right to call on one repurchase agreement with a balance of $50.0 million, resulting in its termination. As of June 30, 2024, the weighted-average maturity was 0.36 years for our repurchase agreements with government entities and 4.38 years for our repurchase agreements with private institutions. The weighted-average interest rates as of June 30, 2024 for outstanding agreements with government entities and private institutions were 1.55% and 3.88%, respectively, with all rates being fixed. Each of our repurchase agreements are accounted for as collateralized financing arrangements (i.e., a secured borrowing) and not as sales and subsequent repurchases of securities.

Current wording

Securities sold under agreements to repurchase were $100.5 million and $150.5 million as of September 30, 2024 and December 31, 2023, respectively. In May 2024, a private institution exercised their right to call on one repurchase agreement with a balance of $50.0 million, resulting in its termination. As of September 30, 2024, the weighted-average interest rate remained relatively unchanged from December 31, 2023 (1.55% for government entities and 3.80% for private institutions). The weighted-average interest rates as of September 30, 2024 for our outstanding agreements with government entities and private institutions were 1.55% and 3.88%, respectively, with all rates being fixed. The weighted-average maturities as of September 30, 2024 for our repurchase agreements with government entities and private institutions were 0.11 year and 4.13 years, respectively. Each of our repurchase agreements are accounted for as collateralized financing arrangements (i.e., a secured borrowing) and not as sales and subsequent repurchases of securities.

Previous wording

Net income decreased by 1.0 million or 2% in the first six months of 2024 compared to the same period in 2023 primarily due to increases in noninterest expense and the provision for credit losses. This was partially offset by an increase in noninterest income. The increase in noninterest expense was primarily due to higher allocated FDIC insurance costs. The increase in the provision for credit losses was primarily due to higher net charge-offs in the installment loan portfolio and lower recoveries in the home equity portfolio. The increase in noninterest income was primarily due to higher trust and asset management fees, higher institutional investment advisory fees, and higher annuity and insurance income.

Current wording

Net income decreased by $1.6 million or 5% in the third quarter of 2024 compared to the same period in 2023 primarily due to increases in noninterest expense and the provision for credit losses, as well as a decrease in net interest income, partially offset by an increase in noninterest income. The increase in noninterest expense was primarily due to higher allocated administrative and support unit costs. The increase in the provision for credit losses was primarily due to higher net charge-offs in the installment loan and auto loan portfolios. The decrease in net interest income was primarily due to lower deposit spreads on higher deposit balances, partially offset by higher loan spreads. The increase in noninterest income was primarily due to higher trust and asset management fees.

Previous wording

Net income decreased by 4.0 million or 11% in the second quarter of 2024 compared to the same period in 2023 primarily due to increases in noninterest expense and the provision for credit losses. This was partially offset by an increase in noninterest income. The increase in noninterest expense was primarily due to higher allocated FDIC insurance costs. The increase in the provision for credit losses was primarily due to lower recoveries in the home equity portfolio and higher net charge-offs in the installment loan portfolio. The increase in noninterest income was primarily due to higher trust and asset management fees and higher annuity and insurance income.

Current wording

Net income decreased by $2.6 million or 3% in the first nine months of 2024 compared to the same period in 2023 primarily due to increases in noninterest expense and the provision for credit losses, partially offset by an increase in noninterest income. The increase in noninterest expense was primarily due to higher allocated FDIC insurance costs and higher allocated administrative and support unit costs. The increase in the provision for credit losses was primarily due to higher net charge-offs in the installment loan and residential loan portfolios. The increase in noninterest income was primarily due to higher trust and asset management fees.

Previous wording

Net income decreased by $1.4 million or 4.4% in the second quarter of 2024 compared to the same period in 2023 primarily due to decreases in net interest income and noninterest income, partially offset by a decrease in noninterest expense. The decrease in net interest income was primarily due to a lower realized net spread on savings deposits and a decrease in time deposit balances. The decrease in net interest income was partially offset by increases to savings and interest bearing deposit balances along with increased spreads on noninterest bearing deposits. The decrease in noninterest income was primarily due to a decrease in customer derivative program revenue and other loan fees, partially offset by an increase in account analysis revenue. The decrease in noninterest expense is primarily due to reduced allocated administrative and support unit expenses, lower salaries & benefits, and lower broker charges related to the customer derivative program.

Current wording

Net income decreased by $2.0 million or 6.7% in the third quarter of 2024 compared to the same period in 2023 primarily due to decreases in net interest income and noninterest income, partially offset by a decrease in noninterest expense and a reduction in the tax provision. The decrease in net interest income was primarily due to reductions in deposit balances and an increase in the provision for credit losses. The decrease in net interest income was partially offset by an increase in loan balances. The decrease in noninterest income was primarily due to a decrease in customer derivative program revenue, partially offset by an increase in other loan fees. The decrease in noninterest expense is primarily due to reduced allocated administrative and support unit expenses, lower salaries & benefits, and lower broker charges related to the customer derivative program, partially offset by an increase in operational losses.

Previous wording

Net income decreased by $5.1 million or 8% in the first six months of 2024 compared to the same period in 2023 primarily due to decreases in interest income and noninterest income, partially offset by a decrease in noninterest expense, and a reduction in the tax provision. The decrease in net interest income was primarily due to lower realized spread on savings and interest bearing deposits, as well as reduced spread on commercial mortgage and commercial and industrial loans. The decrease was partially offset by increased balances and earnings credits on noninterest bearing deposits, inflows to the commercial and industrial and construction portfolios, and improved spreads on the leasing portfolio. The decrease in noninterest income is primarily due to reduced customer derivative program revenue, letter of credit fees, certificate of deposit breakage fees, and gains on sale of leased assets. The decrease was partially offset by an increase in account analysis fees and fees earned on money market sweep balances. The decrease in noninterest expense is primarily due to reduced allocated administrative and support unit expenses, salaries & benefits, and broker charges related to the customer derivative program.

Current wording

Net income decreased by $7.2 million or 7.6% in the first nine months of 2024 compared to the same period in 2023 primarily due to decreases in interest income and noninterest income, partially offset by a decrease in noninterest expense, and a reduction in the tax provision. The decrease in net interest income was primarily due to lower deposits spreads and an increase in the provision for credit losses. The decrease in noninterest income is primarily due to reduced customer derivative program revenue. The decrease in noninterest expense is primarily due to reduced allocated administrative and support unit expenses, salaries & benefits, and broker charges related to the customer derivative program.