FIRST HAWAIIAN INC

Previous wording

The foregoing factors should not be considered an exhaustive list and should be read together with the risk factors and other cautionary statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law.

Current wording

The foregoing factors should not be considered an exhaustive list and should be read together with the risk factors and other cautionary statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law.

Previous wording

Hawaii’s economy remains relatively resilient in the wake of high consumer prices and the wildfires that struck, and continue to affect, the island of Maui in early August 2023. According to the State of Hawaii Department of Labor and Industrial Relations, the statewide seasonally adjusted unemployment rate decreased to 3.1% at March 31, 2024, compared to 3.5% at March 31, 2023. Nationally, the seasonally adjusted unemployment rate was 3.8% at March 31, 2024 compared to 3.5% at March 31, 2023.

Current wording

Hawaii’s economy remains relatively resilient in the wake of high consumer prices and the August 2023 wildfires that continue to affect the island of Maui. According to the State of Hawaii Department of Labor and Industrial Relations, the statewide seasonally adjusted unemployment rate decreased to 2.9% at June 30, 2024, compared to 3.0% at June 30, 2023. Nationally, the seasonally adjusted unemployment rate was 4.1% at June 30, 2024 compared to 3.6% at June 30, 2023.

Previous wording

Domestic visitor arrivals for the state continue to remain strong, with the average daily domestic passenger counts for the first three months of 2024 similar to the average daily passenger counts during the first three months of 2023, according to the Hawaii Tourism Authority. International visitor arrivals from Japan in the first three months of 2024 were the highest for a first calendar quarter in the last three years, but the recovery of arrivals from Japan to pre-pandemic levels remains slow due to the weak yen.

Current wording

Domestic visitor arrivals for the state remain strong, with the average daily domestic passenger counts for the first six months of 2024 relatively similar to the average daily passenger counts during the first six months of 2023, according to the Hawaii Tourism Authority. International visitor arrivals from Japan in the first six months of 2024 have increased significantly as compared to the first six months of each of the last three years, but the level of arrivals from Japan remains below pre-pandemic levels due to the weak yen.

Previous wording

The housing market has remained relatively stable. According to the Honolulu Board of Realtors, the volume of single-family home sales increased by 6.1%, while condominium sales decreased by 7.1%, when comparing the first three months of 2024 with the same period in 2023. The median price of a single-family home sold on Oahu in the first three months of 2024 was $1,070,000, an increase of 4.4% from the same period in 2023. The median price of a condominium sold on Oahu in the first three months of 2024 was $505,000, an increase of 1.0% from the same period in 2023. As of March 31, 2024, months of inventory of single-family homes and condominiums on Oahu remained low at approximately 2.7 and 4.0 months, respectively.

Current wording

The local Oahu housing market has remained relatively stable, but is experiencing some softening as compared to previous years primarily due to high interest rates. According to the Honolulu Board of Realtors, the volume of single-family home sales increased by 6.7%, while condominium sales decreased by 5.8%, in each case when comparing the first six months of 2024 with the same period in 2023. When comparing the first six months of 2024 with the same period in 2022, however, the volume of single-family home sales decreased by 30.3%, while condominium sales decreased by 39.6%. The median price of a single-family home sold on Oahu in the first six months of 2024 was $1,085,000, an increase of 3.3% from the same period in 2023. The median price of a condominium sold on Oahu in the first six months of 2024 was $510,000, an increase of 2.0% from the same period in 2023. As of June 30, 2024, months of inventory of single-family homes and condominiums on Oahu remained low at approximately 3.0 and 4.7 months, respectively.

Previous wording

In early August of 2023, wildfires swept across several areas of Maui, impacting residents in upcountry Maui and devastating the historic town of Lahaina. As part of the relief efforts, we contributed $250,000 to the Hawaii Community Foundation’s Maui Strong Fund and continue to offer various loan payment deferral options to our affected borrowers. Our operations on Maui also recovered quickly and we are in process of re-opening a temporary location for the Lahaina branch.

Current wording

In early August of 2023, wildfires swept across several areas of Maui, impacting residents in upcountry Maui and devastating the historic town of Lahaina.

Previous wording

The outstanding balance of real estate-secured loans in the Maui fire zones totaled approximately $102 million as of March 31, 2024. We require our borrowers to maintain adequate levels of insurance, including fire insurance on residential mortgages. Although we are working closely with our resident and business borrowers to navigate the post-disaster period, there still remains a great deal of uncertainty regarding their recovery, including how long it will be before rebuilding can start, the amounts of available insurance coverage, the availability of government assistance for our borrowers in the long run or whether their longer-term ability to repay their loans has been diminished.

Current wording

The outstanding balance of real estate-secured loans in the Maui fire zones totaled approximately $98 million as of June 30, 2024. We require our borrowers to maintain adequate levels of insurance, including fire insurance on residential mortgages. Although we are working closely with our resident and business borrowers to navigate the post-disaster period, there still remains a great deal of uncertainty regarding their recovery, including how long it will be before rebuilding can start, the amounts of available insurance coverage, the availability of government assistance for our borrowers in the long run or whether their longer-term ability to repay their loans has been diminished.

Previous wording

We also expect that the aftermath of the wildfires will continue to impact commercial activity throughout the island of Maui, but there remains much uncertainty as to how long it will take Maui to rebuild, return tourism to historic levels, and recover economically. Visitor counts to Maui in the first quarter of 2024 are up from August 2023, especially with the re-opening of West Maui in late 2023, but are still lower than in the first quarter of 2023 and before the COVID-19 pandemic in 2019.

Current wording

We also expect that the aftermath of the wildfires will continue to impact commercial activity throughout the island of Maui, but there remains much uncertainty as to how long it will take Maui to rebuild, return tourism to historic levels, and recover economically. Visitor counts to Maui in the first half of 2024 are up from August 2023, especially with the re-opening of West Maui in late 2023, but are still lower than in the first half of 2023 and before the COVID-19 pandemic in 2019.

Previous wording

As of March 31, 2024, the Company was “well-capitalized” and met all applicable regulatory capital requirements, including a Common Equity Tier 1 capital ratio of 12.55%, compared to the minimum requirement of 4.50%. For additional discussions regarding our capital and liquidity positions and related risks, refer to the sections titled “Liquidity and Capital Resources” and “Capital” in this MD&A.

Current wording

As of June 30, 2024, the Company was “well-capitalized” and met all applicable regulatory capital requirements, including a Common Equity Tier 1 capital ratio of 12.73%, compared to the minimum requirement of 4.50%. For additional discussions regarding our capital and liquidity positions and related risks, refer to the sections titled “Liquidity and Capital Resources” and “Capital” in this MD&A.

Previous wording

Net income was $54.2 million for the three months ended March 31, 2024, a decrease of $12.6 million or 19% as compared to the same period in 2023. Basic and diluted earnings per share were both $0.42 per share for the three months ended March 31, 2024, a decrease of $0.10 per share or 19% as compared to the same period in 2023. The decrease in net income was primarily due to a $12.8 million decrease in net interest income and a $10.2 million increase in noninterest expense. This was partially offset by a $5.6 million decrease in the provision for income taxes, a $2.5 million decrease in the provision for credit losses (the “Provision”) and a $2.3 million increase in noninterest income.

Current wording

Net income was $61.9 million for the three months ended June 30, 2024, a decrease of $0.5 million or 1% as compared to the same period in 2023. Basic and diluted earnings per share were both $0.48 per share for the three months ended June 30, 2024, a decrease of $0.01 per share or 2% as compared to the same period in 2023. The decrease in net income was primarily due to a $7.1 million decrease in net interest income and a $1.2 million increase in noninterest expense. This was partially offset by a $4.4 million increase in noninterest income and a $3.2 million decrease in the provision for credit losses (the “Provision”).

Previous wording

Our return on average total assets was 0.90% for the three months ended March 31, 2024, a decrease of 20 basis points from the same period in 2023, and our return on average total stockholders’ equity was 8.73% for the three months ended March 31, 2024, a decrease of 305 basis points from the same period in 2023. Our return on average tangible assets was 0.94% for the three months ended March 31, 2024, a decrease of 21 basis points from the same period in 2023, and our return on average tangible stockholders’ equity was 14.53% for the three months ended March 31, 2024, a decrease of 625 basis points from the same period in 2023, primarily due to lower net income driven by higher deposit funding costs. Our efficiency ratio was 62.15% for the three months ended March 31, 2024 compared to 54.46% for the same period in 2023.

Current wording

Our return on average total assets was 0.97% for the six months ended June 30, 2024, a decrease of nine basis points from the same period in 2023, and our return on average total stockholders’ equity was 9.32% for the six months ended June 30, 2024, a decrease of 191 basis points for the same period in 2023. Our return on average tangible assets was 1.01% for the six months ended June 30, 2024, a decrease of nine basis points from the same period in 2023, and our return on average tangible stockholders’ equity was 15.48% for the six months ended June 30, 2024, a decrease of 417 basis points from the same period in 2023, primarily due to an increase in average tangible equity and lower net income driven by higher deposit funding costs. Our efficiency ratio was 60.69% for the six months ended June 30, 2024 compared to 56.17% for the same period in 2023.

Previous wording

For the three months ended March 31, 2024, we continued to maintain high levels of liquidity and adequate reserves for credit losses. We also remained well-capitalized. Common Equity Tier 1 (“CET1”) was 12.55% as of March 31, 2024, an increase of 16 basis points from December 31, 2023. The increase in CET1 was primarily due to earnings for the three months ended March 31, 2024, partially offset by the dividends declared and paid to the Company’s stockholders.

Current wording

For the six months ended June 30, 2024, we continued to maintain high levels of liquidity and adequate reserves for credit losses. We also remained well-capitalized. Common Equity Tier 1 (“CET1”) was 12.73% as of June 30, 2024, an increase of 34 basis points from December 31, 2023. The increase in CET1 was primarily due to earnings for the six months ended June 30, 2024, partially offset by the dividends declared and paid to the Company’s stockholders.

Previous wording

Net interest income, on a fully taxable-equivalent basis, was $155.9 million for the three months ended March 31, 2024, a decrease of $12.8 million or 8% compared to the same period in 2023. Our net interest margin was 2.91% for the three months ended March 31, 2024, a decrease of 20 basis points from the same period in 2023. The decrease in net interest income, on a fully taxable-equivalent basis, was primarily due to higher deposit funding costs and lower average balances in our investment securities portfolio, partially offset by higher yields in our loan and lease portfolio and higher average balances in our interest-bearing deposits in other banks during the three months ended March 31, 2024, compared to the same period in 2023. Deposit funding costs were $84.1 million for the three months ended March 31, 2024, an increase of $40.8 million or 94% compared to the same period in 2023, primarily due to an increase in interest rates. Rates paid on our interest-bearing deposits were 2.54% for the three months ended March 31, 2024, an increase of 116 basis points compared to the same period in 2023, primarily due to increases in our money market, time and savings deposits. For the three months ended March 31, 2024, the average balance of our investment securities portfolio was $6.2 billion, a decrease of $1.2 billion or 16% as compared to the same period in 2023, primarily due to the sales, maturities and payments of investment securities in 2023. The yield on our loan and lease portfolio was 5.63% for the three months ended March 31, 2024, an increase of 67 basis points as compared to the same period in 2023. We experienced an increase in our yields from total loans and leases primarily due to increases in yields from our adjustable-rate commercial real estate loans and commercial and industrial loans, which are largely based on the Secured Overnight Financing Rate (“SOFR”). For the three months ended March 31, 2024, the average balance of our interest-bearing deposits in other banks was $858.6 million, an increase of $559.0 million as compared to the same period in 2023.

Current wording

Net interest income, on a fully taxable-equivalent basis, was $310.3 million for the six months ended June 30, 2024, a decrease of $19.6 million or 6% compared to the same period in 2023. Our net interest margin was 2.91% for the six months ended June 30, 2024, a decrease of 10 basis points from the same period in 2023. The decrease in net interest income, on a fully taxable-equivalent basis, was driven by the interest rate environment and was primarily due to higher deposit funding costs and lower average balances in our investment securities portfolio. This was partially offset by higher earning asset yields driven by higher yields in our loan and lease portfolio and higher average balances on our interest-bearing deposits in other banks during the six months ended June 30, 2024. Deposit funding costs were $169.8 million for the six months ended June 30, 2024, an increase of $68.4 million or 67% compared to the same period in 2023 primarily due to an increase in interest rates. Rates paid on our interest-bearing deposits were 2.56% for the six months ended June 30, 2024, an increase of 96 basis points compared to the same period in 2023, primarily due to increases in our money market, time and savings deposits. For the six months ended June 30, 2024, the average balance of our investment securities portfolio was $6.1 billion, a decrease of $1.2 billion or 16% compared to the same period in 2023, primarily due to payments and maturities, in addition to the sale of securities in 2023. The yield on our loan and lease portfolio was 5.65% for the six months ended June 30, 2024, an increase of 56 basis points as compared to the same period in 2023. We experienced an increase in our yields from total loans and leases primarily due to increases in yields from our adjustable-rate commercial real estate loans, commercial and industrial loans and construction loans, which are largely based on the SOFR, in addition to higher rates on loans that originated during the period. For the six months ended June 30, 2024, the average balance on our interest-bearing deposits in other banks was $815.9 million, an increase of $380.7 million or 87% compared to the same period in 2023.

Previous wording

The Federal Reserve influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. Our loan portfolio is affected by changes in the prime interest rate. The prime rate began in 2023 at 7.50% and increased 100 basis points (25 basis points each in February, March, May and July) to end the year at 8.50%, where it remained as at the end of the first quarter of 2024. As noted above, our loan portfolio is also impacted by changes in the SOFR. At March 31, 2024, the one-month and three-month CME Term SOFR interest rates were 5.33% and 5.30%, respectively. At March 31, 2023, the one-month and three-month CME Term SOFR interest rates were 4.80% and 4.91%, respectively. The target range for the federal funds rate, which is the cost of immediately available overnight funds, began in 2023 at 4.25% to 4.50%, and increased 100 basis points to end the year at 5.25% to 5.50%, where it remained as at the end of the first quarter of 2024.

Current wording

The Federal Reserve influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. Our loan portfolio is affected by changes in the prime interest rate. The prime rate began in 2023 at 7.50% and increased 100 basis points (25 basis points each in February, March, May and July) to end the year at 8.50%, where it remained as at the end of the second quarter of 2024. As noted above, our loan portfolio is also impacted by changes in the SOFR. At June 30, 2024, the one-month and three-month CME Term SOFR interest rates were 5.34% and 5.32%, respectively. At June 30, 2023, the one-month and three-month CME Term SOFR interest rates were 5.14% and 5.27%, respectively. The target range for the federal funds rate, which is the cost of immediately available overnight funds, began in 2023 at 4.25% to 4.50%, and increased 100 basis points to end the year at 5.25% to 5.50%, where it remained as at the end of the second quarter of 2024.

Previous wording

The Provision was $6.3 million for the three months ended March 31, 2024, a decrease of $2.5 million or 28% as compared to the same period in 2023. The decrease in the Provision was primarily due to decreases in the provision for consumer loans and home equity lines and the provision for unfunded construction and home equity line commitments. This was partially offset by increases in the provision for commercial real estate loans, commercial and industrial loans and construction loans. We recorded net charge-offs of loans and leases of $3.8 million and $3.2 million for the three months ended March 31, 2024 and 2023, respectively. This represented net charge-offs of 0.11% and 0.09% of average loans and leases, on an annualized basis, for the three months ended March 31, 2024 and 2023, respectively. The ACL was $159.8 million as of March 31, 2024, an increase of $3.3 million or 2% from December 31, 2023 and represented 1.12% of total outstanding loans and leases as of March 31, 2024 compared to 1.09% of total outstanding loans and leases as of December 31, 2023. The reserve for unfunded commitments was $34.8 million as of March 31, 2024, compared to $35.6 million as of December 31, 2023. The Provision is recorded to maintain the ACL and the reserve for unfunded commitments at levels deemed adequate by management based on the factors noted in the “Risk Governance and Quantitative and Qualitative Disclosures About Market Risk — Credit Risk” section of this MD&A.

Current wording

The Provision was $1.8 million for the three months ended June 30, 2024, a decrease of $3.2 million or 64% as compared to the same period in 2023. The decrease in the Provision for the three months ended June 30, 2024 was primarily due to decreases in the provision for construction loans, home equity lines and commercial and industrial loans and the provision for unfunded commercial real estate and construction commitments. This was partially offset by increases in the provision for residential mortgage loans and commercial real estate loans. We recorded net charge-offs of loans and leases of $2.5 million and $3.5 million for the three months ended June 30, 2024 and 2023, respectively. This represented net charge-offs of 0.07% and 0.10% of average loans and leases, on an annualized basis, for the three months ended June 30, 2024 and 2023, respectively. The Provision was $8.1 million for the six months ended June 30, 2024, a decrease of $5.7 million or 41% as compared to the same period in 2023. The decrease was primarily due to decreases in the provision for consumer loans, home equity lines and construction loans and the provision for unfunded construction and home equity line commitments. This was partially offset by increases in the provision for residential mortgage loans, commercial real estate loans and lease financing. We recorded net charge-offs of loans and leases of $6.3 million and $6.8 million for the six months ended June 30, 2024 and 2023, respectively. This represented net charge-offs of 0.09% and 0.10% of average loans and leases, on an annualized basis, for the six months ended June 30, 2024 and 2023, respectively. The ACL was $160.5 million as of June 30, 2024, an increase of $4.0 million or 3% from December 31, 2023 and represented 1.12% of total outstanding loans and leases as of June 30, 2024 compared to 1.09% of total outstanding loans and leases as of December 31, 2023. The reserve for unfunded commitments was $33.4 million as of June 30, 2024, compared to $35.6 million as of December 31, 2023. The Provision is recorded to maintain the ACL and the reserve for unfunded commitments at levels deemed adequate by management based on the factors noted in the “Risk Governance and Quantitative and Qualitative Disclosures About Market Risk — Credit Risk” section of this MD&A.

Previous wording

Table 5 presents the major components of noninterest income for the three months ended March 31, 2024 and 2023:

Current wording

Table 7 presents the major components of noninterest income for the three months ended June 30, 2024 and 2023 and Table 8 presents the major components of noninterest income for the six months ended June 30, 2024 and 2023:

Previous wording

Credit and debit card fees were $16.2 million for the three months ended March 31, 2024, a decrease of $0.1 million or 1% as compared to the same period in 2023.

Current wording

Credit and debit card fees were $15.9 million for the three months ended June 30, 2024, an increase of $0.4 million or 3% as compared to the same period in 2023. This increase was primarily due to a $1.2 million decrease in network association dues, a $0.8 million increase in debit card interchange fees and a $0.7 million increase in interchange settlement fees, partially offset by a $1.1 million decrease in merchant service revenues and a $1.0 million decrease in ATM interchange and surcharge fees. Credit and debit card fees were $32.0 million for the six months ended June 30, 2024, an increase of $0.3 million or 1% as compared to the same period in 2023.

Previous wording

Other service charges and fees were $9.9 million for the three months ended March 31, 2024, an increase of $0.7 million or 8% as compared to the same period in 2023. This increase was primarily due to a $0.6 million increase in fees from annuities and securities.

Current wording

Other service charges and fees were $11.0 million for the three months ended June 30, 2024, an increase of $2.0 million or 22% as compared to the same period in 2023. This increase was primarily due to a $1.8 million increase in fees from annuities and securities. Other service charges and fees were $20.9 million for the six months ended June 30, 2024, an increase of $2.7 million or 15% as compared to the same period in 2023. This increase was primarily due to a $2.4 million increase in fees from annuities and securities and a $0.2 million increase in insurance income.

Previous wording

Trust and investment services income was $10.4 million for the three months ended March 31, 2024, an increase of $0.7 million or 8% as compared to the same period in 2023. This increase was primarily due to a $0.3 million increase in investment management fees, a $0.1 million increase in irrevocable trust fees, a $0.1 million increase in business cash management fees and a $0.1 million increase in money market fund management fees.

Current wording

Trust and investment services income was $9.4 million for the three months ended June 30, 2024, a minimal change as compared to the same period in 2023. Trust and investment services income was $19.8 million for the six months ended June 30, 2024, an increase of $0.7 million or 4% as compared to the same period in 2023. This increase was primarily due to a $0.2 million increase in irrevocable trust fees and a $0.2 million increase in money market fund management fees.

Previous wording

BOLI income was $4.3 million for the three months ended March 31, 2024, a decrease of $0.8 million or 16% as compared to the same period in 2023. This decrease was primarily due to a $2.0 million decrease in death benefit proceeds from life insurance policies, partially offset by a $1.1 million increase in BOLI earnings.

Current wording

BOLI income was $3.4 million for the three months ended June 30, 2024, an increase of $0.1 million or 3% as compared to the same period in 2023. BOLI income was $7.6 million for the six months ended June 30, 2024, a decrease of $0.7 million or 9% as compared to the same period in 2023. This decrease was primarily due to a $1.7 million decrease in death benefit proceeds from life insurance policies, partially offset by a $0.9 million increase in BOLI earnings.

Previous wording

Other noninterest income was $3.1 million for the three months ended March 31, 2024, an increase of $1.5 million or 94% as compared to the same period in 2023. This increase was primarily due to $2.0 million in insurance proceeds received in the three months ended March 31, 2024 due to the destruction of the Lahaina branch in the Maui wildfires, a $0.5 million decrease in net losses recognized in income related to derivative contracts and a $0.4 million decrease in interest paid on collateral payments related to derivative instruments, partially offset by a $0.7 million decrease in income due to adjustments to certain liabilities assumed as a result of the Reorganization Transactions, a $0.3 million decrease in market adjustments on mutual funds purchased and a $0.2 million decrease in net credit card equipment sales.

Current wording

Other noninterest income was $4.3 million for the three months ended June 30, 2024, an increase of $1.4 million or 50% as compared to the same period in 2023. This increase was primarily due to $1.9 million in insurance proceeds received in the three months ended June 30, 2024, a $0.5 million decrease in net losses recognized in income related to derivative contracts, a $0.2 million increase in income due to adjustments to certain liabilities assumed as a result of the Reorganization Transactions and a $0.2 million decrease in interest paid on collateral payments related to derivative instruments. This was partially offset by a $0.8 million decrease in customer-related interest rate swap fees, and a $0.8 million decrease in volume-based incentives. Other noninterest income was $7.4 million for the six months ended June 30, 2024, an increase of $2.9 million or 66% as compared to the same period in 2023. This increase was primarily due to $3.9 million in insurance proceeds received in the six months ended June 30, 2024, a $0.9 million decrease in net losses recognized in income related to derivative contracts and a $0.5 million decrease in interest paid on collateral payments related to derivative instruments. This was partially offset by a $0.9 million decrease in customer-related interest rate swap fees, a $0.8 million decrease in volume-based incentives, a $0.5 million decrease in income due to adjustments to certain liabilities assumed as a result of the Reorganization Transactions and a $0.3 million decrease in market adjustments on mutual funds purchased.

Previous wording

Table 6 presents the major components of noninterest expense for the three months ended March 31, 2024 and 2023:

Current wording

Table 9 presents the major components of noninterest expense for the three months ended June 30, 2024 and 2023 and Table 10 presents the major components of noninterest expense for the six months ended June 30, 2024 and 2023:

Previous wording

Salaries and employee benefits expense was $59.3 million for the three months ended March 31, 2024, an increase of $3.2 million or 6% as compared to the same period in 2023. This increase was primarily due to a $1.2 million decrease in payroll and benefit costs being deferred as loan origination costs, a $1.0 million increase in base salaries and related payroll taxes, a $0.6 million increase in incentive compensation and a $0.3 million increase in state unemployment tax expense.

Current wording

Salaries and employee benefits expense was $57.7 million for the three months ended June 30, 2024, a decrease of $0.2 million as compared to the same period in 2023. Salaries and employee benefits expense was $117.0 million for the six months ended June 30, 2024, an increase of $3.1 million or 3% as compared to the same period in 2023. This increase was primarily due to a $2.2 million increase in incentive compensation, a $1.9 million decrease in payroll and benefit costs being deferred as loan origination costs, a $1.1 million increase in base salaries and related payroll taxes, a $0.8 million adjustment made to the deferred compensation plan as a result of market conditions and a $0.4 million increase in group health plan costs. This was partially offset by a $2.0 million expense for payments accrued in the quarter ended June 30, 2023 in connection with separation agreements executed with two executive officers, $0.9 million in severance payments accrued in the quarter ended June 30, 2023 for other employee terminations as part of an effort to reduce operating costs and a $0.5 million decrease in employee overtime pay expense.

Previous wording

Contracted services and professional fees were $15.7 million for the three months ended March 31, 2024, a decrease of $0.6 million or 4% as compared to the same period in 2023. This decrease was primarily due to a $0.7 million decrease in outside services, primarily attributable to technology-related projects, marketing and new customer services and a $0.2 million decrease in contracted data processing expenses. This was partially offset by a $0.3 million increase in audit, legal and consultant fees.

Current wording

Contracted services and professional fees were $16.1 million for the three months ended June 30, 2024, a decrease of $1.4 million or 8% as compared to the same period in 2023. This decrease was primarily due to a $1.5 million decrease in outside services, primarily attributable to technology-related projects, marketing and new customer services. Contracted services and professional fees were $31.8 million for the six months ended June 30, 2024, a decrease of $2.0 million or 6% as compared to the same period in 2023. This decrease was primarily due to a $2.2 million decrease in outside services, primarily attributable to technology-related projects, marketing and new customer services.

Previous wording

Occupancy expense was $6.9 million for the three months ended March 31, 2024, a decrease of $0.8 million or 11% as compared to the same period in 2023. This decrease was primarily due to a $0.4 million decrease in building maintenance expense, a $0.2 million increase in net sublease rental income and a $0.2 million decrease in building depreciation.

Current wording

Occupancy expense was $7.4 million for the three months ended June 30, 2024, a decrease of $0.2 million or 2% as compared to the same period in 2023. Occupancy expense was $14.3 million for the six months ended June 30, 2024, a decrease of $1.0 million or 7% as compared to the same period in 2023. This decrease was primarily due to a $0.6 million increase in net sublease rental income and a $0.5 million decrease in building maintenance expense.

Previous wording

Equipment expense was $13.4 million for the three months ended March 31, 2024, an increase of $3.7 million or 38% as compared to the same period in 2023. This increase was primarily due to a $3.6 million increase in technology-related amortization and licensing and maintenance fees.

Current wording

Equipment expense was $13.2 million for the three months ended June 30, 2024, an increase of $2.2 million or 20% as compared to the same period in 2023. This increase was primarily due to a $2.1 million increase in technology-related amortization and licensing and maintenance fees. Equipment expense was $26.6 million for the six months ended June 30, 2024, an increase of $5.9 million or 28% as compared to the same period in 2023. This increase was primarily due to a $5.7 million increase in technology-related amortization and licensing and maintenance fees.

Previous wording

Regulatory assessment and fees were $8.1 million for the three months ended March 31, 2024, an increase of $4.3 million as compared to the same period in 2023. This increase was primarily due to increases in the FDIC insurance assessment. During 2023, the FDIC approved a final rule for a special assessment to replenish the deposit insurance fund following bank failures occurring earlier in the year. As a result, the Company previously recorded a related loss of $16.3 million in the fourth quarter of 2023. During the first quarter of 2024, the FDIC issued a notice that the original loss estimate related to the 2023 bank failures was subsequently increased and that this increase would result in an additional assessment expense to affected institutions. The Company estimated a related loss of $4.1 million, which was recorded in the first quarter of 2024.

Current wording

Regulatory assessment and fees were $3.8 million for the three months ended June 30, 2024, an increase of $0.1 million or 4% as compared to the same period in 2023. Regulatory assessment and fees were $11.9 million for the six months ended June 30, 2024, an increase of $4.4 million or 59% as compared to the same period in 2023. This increase was primarily due to increases in the FDIC insurance assessment. During 2023, the FDIC approved a final rule for a special assessment to replenish the deposit insurance fund following bank failures occurring earlier in the year. As a result, the Company previously recorded a related loss of $16.3 million in the fourth quarter of 2023. During the first quarter of 2024, the FDIC issued a notice that the original loss estimate related to the 2023 bank failures was subsequently increased and that this increase would result in an additional assessment expense to affected institutions. The Company estimated a related loss of $4.1 million, which was recorded in the first quarter of 2024.

Previous wording

Advertising and marketing expense was $2.6 million for the three months ended March 31, 2024, an increase of $0.6 million or 31% as compared to the same period in 2023. This increase was primarily due to a $0.6 million increase in advertising costs.

Current wording

Advertising and marketing expense was $1.8 million for the three months ended June 30, 2024, a decrease of $0.1 million or 7% as compared to the same period in 2023. Advertising and marketing expense was $4.4 million for the six months ended June 30, 2024, an increase of $0.5 million or 13% as compared to the same period in 2023. This increase was primarily due to a $0.5 million increase in advertising costs.

Previous wording

Card rewards program expense was $8.5 million for the three months ended March 31, 2024, an increase of $0.4 million or 5% as compared to the same period in 2023. This increase was primarily due to a $0.4 million increase in interchange fees paid to our credit card partners and a $0.3 million increase in credit card cash reward redemptions, partially offset by a $0.2 million decrease in priority rewards card redemptions.

Current wording

Card rewards program expense was $8.7 million for the three months ended June 30, 2024, an increase of $1.0 million or 14% as compared to the same period in 2023. This increase was primarily due to a $0.6 million increase in credit card cash reward redemptions and a $0.4 million increase in interchange fees paid to our credit card partners. Card rewards program expense was $17.2 million for the six months ended June 30, 2024, an increase of $1.5 million or 9% as compared to the same period in 2023. This increase was primarily due to a $0.9 million increase in credit card cash reward redemptions and a $0.8 million increase in interchange fees paid to our credit card partners.

Previous wording

The provision for income taxes was $16.5 million (an effective tax rate of 23.29%) for the three months ended March 31, 2024, compared with a provision for income taxes of $22.1 million (an effective tax rate of 24.84%) for the same period in 2023. The change in the effective tax rate was partially due to a reduction in pre-tax income and an increase in non-taxable income for the three months ended March 31, 2024.

Current wording

The provision for income taxes was $18.8 million (an effective tax rate of 23.30%) for the three months ended June 30, 2024, compared with a provision for income taxes of $19.0 million (an effective tax rate of 23.30%) for the same period in 2023. The provision for income taxes was $35.3 million (an effective tax rate of 23.30%) for the six months ended June 30, 2024, compared with a provision for income taxes of $41.0 million (an effective tax rate of 24.10%) for the same period in 2023. The change in the effective tax rate was partially due to a reduction in pre-tax income for the six months ended June 30, 2024.

Previous wording

Our business segments are Retail Banking, Commercial Banking and Treasury and Other. Table 7 summarizes net income from our business segments for the three months ended March 31, 2024 and 2023. Additional information about operating segment performance is presented in “Note 17. Reportable Operating Segments” contained in our unaudited interim consolidated financial statements.

Current wording

Our business segments are Retail Banking, Commercial Banking and Treasury and Other. Table 11 summarizes net income from our business segments for the three and six months ended June 30, 2024 and 2023. Additional information about operating segment performance is presented in “Note 17. Reportable Operating Segments” contained in our unaudited interim consolidated financial statements.

Previous wording

Net income for the Retail Banking segment was $56.1 million for the three months ended March 31, 2024, an increase of $14.6 million or 35% as compared to the same period in 2023. The increase in net income for the Retail Banking segment was primarily due to a $19.1 million increase in net interest income and a $1.8 million increase in noninterest income, partially offset by a $4.7 million increase in the provision for income taxes, a $0.8 million increase in the Provision and a $0.8 million increase in noninterest expense. The increase in net interest income was primarily due to higher deposit spreads and higher loan spreads. The increase in noninterest income was primarily due to increases in other services charges and fees and trust and investment services income. The increase in the provision for income taxes was primarily due to the increase in pretax income. The increase in the provision was primarily due to an increase in the provision for our consumer lending portfolio segment. The increase in noninterest expense was primarily due to increases in salaries and benefits expense and regulatory assessment and fees, partially offset by lower overall expenses that were allocated to the Retail Banking segment.

Current wording

Net income for the Retail Banking segment was $114.4 million for the six months ended June 30, 2024, an increase of $35.8 million or 46% as compared to the same period in 2023. The increase in net income for the Retail Banking segment was primarily due to a $39.6 million increase in net interest income, a $4.3 million increase in noninterest income and a $4.2 million decrease in noninterest expense, partially offset by an $11.9 million increase in the provision for income taxes. The increase in net interest income was primarily due to higher deposit and loan spreads. The increase in noninterest income was primarily due to increases in other service charges and fees, trust and investment services income and service charges on deposit accounts. The decrease in noninterest expense was primarily due to lower overall expenses that were allocated to the Retail Banking segment, partially offset by increases in salaries and benefits expense and regulatory assessment and fees. The increase in the provision for income taxes was primarily due to the increase in pretax income.

Previous wording

Net income for the Commercial Banking segment was $26.7 million for the three months ended March 31, 2024, an increase of $5.8 million or 28% as compared to the same period in 2023. The increase in net income for the Commercial Banking segment was primarily due to a $4.4 million increase in net interest income and a $2.1 million decrease in noninterest expense, partially offset by a $0.9 million increase in the provision for income taxes. The increase in net interest income was primarily due to higher deposit spreads, partially offset by lower loan and lease spreads. The decrease in noninterest expense was primarily due to lower overall expenses that were allocated to the Commercial Banking segment, partially offset by increases in regulatory assessment and fees and salaries and benefits expense. The increase in the provision for income taxes was primarily due to the increase in pretax income.

Current wording

Net income for the Commercial Banking segment was $57.6 million for the six months ended June 30, 2024, an increase of $13.1 million or 30% as compared to the same period in 2023. The increase in net income for the Commercial Banking segment was primarily due to an $8.0 million increase in net interest income, a $6.5 million decrease in noninterest expense and a $1.5 million decrease in the Provision, partially offset by a $2.5 million increase in the provision for income taxes. The increase in net interest income was primarily due to higher deposit spreads, partially offset by lower loan and lease spreads. The decrease in noninterest expense was primarily due to lower overall expenses that were allocated to the Commercial Banking segment, partially offset by increases in salaries and benefits expense and card reward expenses. The decrease in the provision was primarily due to lower allocated provision expenses to the Commercial Banking segment related to commercial loans. The increase in the provision for income taxes was primarily due to the increase in pretax income.

Previous wording

Net loss for the Treasury and Other segment was $28.6 million for the three months ended March 31, 2024, an increase in loss of $33.0 million as compared to the same period in 2023. The increase in net loss for the Treasury and Other segment was primarily due to a $36.4 million increase in net interest expense and an $11.5 million increase in noninterest expense. This was partially offset by a $11.2 million increase in the benefit for income taxes, a $3.2 million decrease in the Provision and a $0.5 million increase in noninterest income. The increase in net interest expense was primarily due to an increase in net transfer pricing charges that reside in the Treasury and Other segment and lower average balances in our investment securities portfolio, partially offset by higher average balances on our interest-bearing deposits in other banks. The increase in noninterest expense was primarily due to lower credit allocations to the Treasury and Other segment and increases in equipment expense and regulatory assessment and fees, partially offset by a decrease in contracted services expense. The increase in the benefit for income taxes was primarily due to the increase in pretax loss. The decrease in the Provision was primarily due to the decrease in the provision for unfunded construction and home equity line commitments. The increase in noninterest income was primarily due to insurance proceeds received in the three months ended March 31, 2024, due to the destruction of the Lahaina branch in the Maui wildfires, partially offset by decreases in BOLI income and income due to adjustments to certain liabilities assumed as a result of the Reorganization Transactions.

Current wording

Net loss for the Treasury and Other segment was $55.8 million for the six months ended June 30, 2024, compared to net income of $6.2 million for the same period in 2023. The increase in net loss was primarily due to a $67.5 million increase in net interest expense and a $22.2 million increase in noninterest expense. This was partially offset by a $20.2 million increase in the benefit for income taxes, a negative Provision of $2.2 million for the six months ended June 30, 2024, compared to a Provision of $2.4 million for the six months ended June 30, 2023, and a $2.9 million increase in noninterest income. The increase in net interest expense was primarily due to an increase in net transfer pricing charges that reside in the Treasury and Other segment and lower average balances in our investment securities portfolio, partially offset by a decrease in interest expense from public deposits and higher average balances on our interest-bearing deposits in other banks. The increase in noninterest expense was primarily due to lower credit allocations to the Treasury and Other segment and an increase in equipment expense, partially offset by a decrease in contracted services and professional fees. The increase in the benefit for income taxes was primarily due to the increase in pretax loss. The decrease in the Provision was primarily due to the decreases in the provision for unfunded construction and home equity line commitments. The increase in noninterest income was primarily due to insurance proceeds received in the six months ended June 30, 2024 and a decrease in net losses recognized in income related to derivative contracts, partially offset by decreases in BOLI income, customer-related interest rate swap fees and income due to adjustments to certain liabilities assumed as a result of the Reorganization Transactions.

Previous wording

Immediate liquid resources are available in cash, which is primarily on deposit with the FRB. As of March 31, 2024 and December 31, 2023, cash and cash equivalents were $1.3 billion and $1.7 billion, respectively. Potential sources of liquidity also include investment securities in our available-for-sale portfolio and held-to-maturity portfolio. The carrying values of our available-for-sale investment securities and held-to-maturity investment securities were $2.2 billion and $4.0 billion as of March 31, 2024, respectively. The carrying values of our available-for-sale investment securities and held-to-maturity investment securities were $2.3 billion and $4.0 billion as of December 31, 2023, respectively. As of March 31, 2024 and December 31, 2023, we maintained our excess liquidity primarily in collateralized mortgage obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac and mortgage-backed securities issued by Ginnie Mae, Freddie Mac, Fannie Mae, Municipal Housing Authorities and non-agency entities. As of March 31, 2024, our available-for-sale investment securities portfolio was comprised of securities with a weighted average life of approximately 4.4 years and our held-to-maturity investment securities portfolio was comprised of securities with a weighted average life of approximately 7.9 years. These funds offer substantial resources to meet either new loan demand or to help offset reductions in our deposit funding base as they provide quick sources of liquidity by pledging to obtain secured borrowings and repurchase agreements or sales of our available-for-sale securities portfolio. Liquidity is further enhanced by our ability to pledge loans to access secured borrowings from the FHLB and the FRB. As of March 31, 2024, we have borrowing capacity of $2.9 billion from the FHLB and $3.2 billion from the FRB based on the amount of collateral pledged.

Current wording

Immediate liquid resources are available in cash, which is primarily on deposit with the Federal Reserve Bank of San Francisco (“FRB”). As of June 30, 2024 and December 31, 2023, cash and cash equivalents were $1.1 billion and $1.7 billion, respectively. Potential sources of liquidity also include investment securities in our available-for-sale portfolio and held-to-maturity portfolio. The carrying values of our available-for-sale investment securities and held-to-maturity investment securities were $2.1 billion and $3.9 billion as of June 30, 2024, respectively. The carrying values of our available-for-sale investment securities and held-to-maturity investment securities were $2.3 billion and $4.0 billion as of December 31, 2023, respectively. As of June 30, 2024 and December 31, 2023, we maintained our excess liquidity primarily in collateralized mortgage obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac and mortgage-backed securities issued by Ginnie Mae, Freddie Mac, Fannie Mae, Municipal Housing Authorities and non-agency entities. As of June 30, 2024, our available-for-sale investment securities portfolio was comprised of securities with a weighted average life of approximately 4.5 years and our held-to-maturity investment securities portfolio was comprised of securities with a weighted average life of approximately 7.9 years. These funds offer substantial resources to meet either new loan demand or to help offset reductions in our deposit funding base as they provide quick sources of liquidity by pledging to obtain secured borrowings and repurchase agreements or sales of our available-for-sale securities portfolio. Liquidity is further enhanced by our ability to pledge loans to access secured borrowings from the Federal Home Loan Bank of Des Moines (“FHLB”) and the FRB. As of June 30, 2024, we have borrowing capacity of $2.7 billion from the FHLB and $3.1 billion from the FRB based on the amount of collateral pledged.

Previous wording

Our core deposits have historically provided us with a long-term source of stable and relatively lower cost of funding. Our core deposits, defined as all deposits exclusive of time deposits exceeding $250,000, totaled $19.2 billion and $19.5 billion as of March 31, 2024 and December 31, 2023, respectively, which represented 93% and 91% of our total deposits as of March 31, 2024 and December 31, 2023, respectively. These core deposits are normally less volatile and are often with customer relationships tied to other products offered by the Company. However, deposit levels could decrease if interest rates increase significantly or if corporate customers increase investing activities, including alternative investment options, that reduce deposit balances.

Current wording

Our core deposits have historically provided us with a long-term source of stable and relatively lower cost of funding. Our core deposits, defined as all deposits exclusive of time deposits exceeding $250,000, totaled $18.9 billion and $19.5 billion as of June 30, 2024 and December 31, 2023, respectively, which represented 93% and 91% of our total deposits as of June 30, 2024 and December 31, 2023, respectively. These core deposits are normally less volatile, often with customer relationships tied to other products offered by the Company; however, deposit levels could decrease if interest rates increase significantly or if corporate customers increase investing activities, including alternative investment options, that reduce deposit balances.

Previous wording

We hold interests in several unconsolidated variable interest entities (“VIEs”). These unconsolidated VIEs are primarily low-income housing tax credit investments in partnerships and limited liability companies. Variable interests are defined as contractual ownership or other interests in an entity that change with fluctuations in an entity’s net asset value. The primary beneficiary consolidates the VIE. Based on our analysis, we have determined that the Company is not the primary beneficiary of these entities. As a result, we do not consolidate these VIEs. Unfunded commitments to fund these low-income housing tax credit investments were $77.2 million and $80.7 million as of March 31, 2024 and December 31, 2023, respectively.

Current wording

We hold interests in several unconsolidated variable interest entities (“VIEs”). These unconsolidated VIEs are primarily low-income housing tax credit investments in partnerships and limited liability companies. Variable interests are defined as contractual ownership or other interests in an entity that change with fluctuations in an entity’s net asset value. The primary beneficiary consolidates the VIE. Based on our analysis, we have determined that the Company is not the primary beneficiary of these entities. As a result, we do not consolidate these VIEs. Unfunded commitments to fund these low-income housing tax credit investments were $92.2 million and $80.7 million as of June 30, 2024 and December 31, 2023, respectively.

Previous wording

We sell residential mortgage loans on the secondary market, primarily to Fannie Mae or Freddie Mac. The agreements under which we sell residential mortgage loans to Fannie Mae or Freddie Mac contain provisions that include various representations and warranties regarding the origination and characteristics of the residential mortgage loans. Although the specific representations and warranties vary among investors, insurance or guarantee agreements, they typically cover ownership of the loan, validity of the lien securing the loan, the absence of delinquent taxes or liens against the property securing the loan, compliance with loan criteria set forth in the applicable agreement, compliance with applicable federal, state and local laws and other matters. The unpaid principal balance of our portfolio of residential mortgage loans sold was $1.3 billion as of both March 31, 2024 and December 31, 2023. The agreements under which we sell residential mortgage loans require delivery of various documents to the investor or its document custodian. Although these loans are primarily sold on a non-recourse basis, we may be obligated to repurchase residential mortgage loans or reimburse investors for losses incurred if a loan review reveals that underwriting and documentation standards were potentially not met in the origination of those loans. Upon receipt of a repurchase request, we work with investors to arrive at a mutually agreeable resolution. Repurchase demands are typically reviewed on an individual loan by loan basis to validate the claims made by the investor to determine if a contractually required repurchase event has occurred. We manage the risk associated with potential repurchases or other forms of settlement through our underwriting and quality assurance practices and by servicing mortgage loans to meet investor and secondary market standards. For the three months ended March 31, 2024, there were no residential mortgage loan repurchases and there were no pending repurchase requests.

Current wording

We sell residential mortgage loans on the secondary market, primarily to Fannie Mae or Freddie Mac. The agreements under which we sell residential mortgage loans to Fannie Mae or Freddie Mac contain provisions that include various representations and warranties regarding the origination and characteristics of the residential mortgage loans. Although the specific representations and warranties vary among investors, insurance or guarantee agreements, they typically cover ownership of the loan, validity of the lien securing the loan, the absence of delinquent taxes or liens against the property securing the loan, compliance with loan criteria set forth in the applicable agreement, compliance with applicable federal, state and local laws and other matters. The unpaid principal balance of our portfolio of residential mortgage loans sold was $1.3 billion as of both June 30, 2024 and December 31, 2023. The agreements under which we sell residential mortgage loans require delivery of various documents to the investor or its document custodian. Although these loans are primarily sold on a non-recourse basis, we may be obligated to repurchase residential mortgage loans or reimburse investors for losses incurred if a loan review reveals that underwriting and documentation standards were potentially not met in the origination of those loans. Upon receipt of a repurchase request, we work with investors to arrive at a mutually agreeable resolution. Repurchase demands are typically reviewed on an individual loan by loan basis to validate the claims made by the investor to determine if a contractually required repurchase event has occurred. We manage the risk associated with potential repurchases or other forms of settlement through our underwriting and quality assurance practices and by servicing mortgage loans to meet investor and secondary market standards. For the six months ended June 30, 2024, there were no residential mortgage loan repurchases and there were no pending repurchase requests.

Previous wording

In addition to servicing loans in our portfolio, substantially all of the loans we sell to investors are sold with servicing rights retained. We also service loans originated by other mortgage loan originators. As servicer, our primary duties are to: (1) collect payments due from borrowers; (2) advance certain delinquent payments of principal and interest; (3) maintain and administer any hazard, title or primary mortgage insurance policies relating to the mortgage loans; (4) maintain any required escrow accounts for payment of taxes and insurance and administer escrow payments; and (5) foreclose on defaulted mortgage loans, or loan modifications or short sales. Each agreement under which we act as servicer generally specifies a standard of responsibility for actions taken by the Company in such capacity and provides protection against expenses and liabilities incurred by the Company when acting in compliance with the respective servicing agreements. However, if we commit a material breach of obligations as servicer, we may be subject to termination if the breach is not cured within a specified period following notice. The standards governing servicing and the possible remedies for violations of such standards vary by investor. These standards and remedies are determined by servicing guides issued by the investors as well as the contract provisions established between the investors and the Company. Remedies could include repurchase of an affected loan. For the three months ended March 31, 2024, we had no repurchase requests related to loan servicing activities, nor were there any pending repurchase requests as of March 31, 2024.

Current wording

In addition to servicing loans in our portfolio, substantially all of the loans we sell to investors are sold with servicing rights retained. We also service loans originated by other mortgage loan originators. As servicer, our primary duties are to: (1) collect payments due from borrowers; (2) advance certain delinquent payments of principal and interest; (3) maintain and administer any hazard, title or primary mortgage insurance policies relating to the mortgage loans; (4) maintain any required escrow accounts for payment of taxes and insurance and administer escrow payments; and (5) foreclose on defaulted mortgage loans, or loan modifications or short sales. Each agreement under which we act as servicer generally specifies a standard of responsibility for actions taken by the Company in such capacity and provides protection against expenses and liabilities incurred by the Company when acting in compliance with the respective servicing agreements. However, if we commit a material breach of obligations as servicer, we may be subject to termination if the breach is not cured within a specified period following notice. The standards governing servicing and the possible remedies for violations of such standards vary by investor. These standards and remedies are determined by servicing guides issued by the investors as well as the contract provisions established between the investors and the Company. Remedies could include repurchase of an affected loan. For the six months ended June 30, 2024, we had no repurchase requests related to loan servicing activities, nor were there any pending repurchase requests as of June 30, 2024.

Previous wording

The carrying value of our investment securities portfolio was $6.1 billion as of March 31, 2024, a decrease of $149.4 million or 2% compared to December 31, 2023. Our available-for-sale investment securities are carried at fair value with changes in fair value reflected in other comprehensive income or through the Provision. Our held-to-maturity investment securities are carried at amortized cost.

Current wording

The carrying value of our investment securities portfolio was $6.0 billion as of June 30, 2024, a decrease of $311.7 million or 5% compared to December 31, 2023. Our available-for-sale investment securities are carried at fair value with changes in fair value reflected in other comprehensive income or through the Provision. Our held-to-maturity investment securities are carried at amortized cost.

Previous wording

As of March 31, 2024, we maintained all of our investment securities in either the available-for-sale category (recorded at fair value) or the held-to-maturity category (recorded at amortized cost) in the unaudited interim consolidated balance sheets, with $3.4 billion invested in collateralized mortgage obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac. Our investment securities portfolio also included $2.4 billion in mortgage-backed securities issued by Ginnie Mae, Freddie Mac, Fannie Mae, Municipal Housing Authorities and non-agency entities, $239.7 million in collateralized loan obligations, $84.4 million in debt securities issued by the U.S. Treasury, government agencies (U.S. International Development Finance Corporation bonds) and government-sponsored enterprises and $54.3 million in debt securities issued by states and political subdivisions.

Current wording

As of June 30, 2024, we maintained all of our investment securities in either the available-for-sale category (recorded at fair value) or the held-to-maturity category (recorded at amortized cost) in the unaudited interim consolidated balance sheets, with $3.3 billion invested in collateralized mortgage obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac. Our investment securities portfolio also included $2.3 billion in mortgage-backed securities issued by Ginnie Mae, Freddie Mac, Fannie Mae, Municipal Housing Authorities and non-agency entities, $218.0 million in collateralized loan obligations, $83.2 million in debt securities issued by the U.S. Treasury, government agencies (U.S. International Development Finance Corporation bonds) and government-sponsored enterprises and $54.4 million in debt securities issued by states and political subdivisions.