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Date

Monday, January 26, 2026 at 1 p.m. ET

Call participants

  • Chairman, President, and Chief Executive Officer — Peter S. Ho
  • Vice Chairman and Chief Commercial Officer — Bradley Shairson
  • Vice Chairman, Chief Financial Officer and Treasurer — Bradley S. Satenberg
  • Vice Chairman of Consumer Banking — James Polk
  • Director of Investor Relations — Chang Park

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Takeaways

  • Diluted EPS -- $1.39, up 63% year over year and 16% sequentially.
  • Net interest margin (NIM) -- 2.61%, up 15 basis points, marking the seventh straight quarter of expansion.
  • Return on common equity -- 15%, reflecting improvement in capital efficiency.
  • Non-interest-bearing demand deposits -- Increased 6.6% from last quarter, attributed to balanced contributions across business segments.
  • Loan portfolio composition -- $8 billion (57%) in consumer loans and $6.1 billion (43%) in commercial loans with consumer portfolio weighted average FICO of 799 for mortgages and 730 for auto loans.
  • Commercial real estate (CRE) concentration -- $4.2 billion, or 30% of total loans, with diversification across property types; no single type exceeding 8.5% of loans and 73% of commercial loans secured by real estate.
  • Net charge-offs -- $4.1 million or 12 basis points annualized, up 5 basis points from the linked quarter.
  • Nonperforming assets (NPA) -- 10 basis points, down 2 basis points sequentially; criticized loans at 2.12%, up 7 basis points from last quarter.
  • Allowance for credit losses (ACL) -- $146.8 million, representing 1.04% of total loans, down 2 basis points sequentially.
  • Net interest income (NII) -- Grew by $8.7 million sequentially, the largest quarterly improvement in the last seven quarters.
  • Deposit mix shift -- Positive $100 million impact this quarter; first positive contribution since 2022, with average quarterly mix shift dropping sharply from $340 million in 2024 to $25 million in 2025.
  • Deposit cost -- Interest-bearing deposit costs declined 16 basis points to 1.43%, while average CD costs fell by 22 basis points to 3.18%.
  • Spot rate on deposits -- 1.3%, which is 13 basis points below the average for the quarter, suggesting further deposit cost improvement in the next quarter.
  • Interest rate swap portfolio -- $1.5 billion pay-fixed receive-floating portfolio at 3.5% average fixed, along with $500 million of forward starting swaps at a 3.1% weighted average rate.
  • Noninterest income -- $44.3 million, includes an $18.1 million gain on merchant services sale, a $16.8 million loss from investment portfolio repositioning, and recurring fee income expected to normalize to $42 million to $43 million next quarter.
  • Noninterest expense -- $109.5 million, down from $112.4 million sequentially, with a $1.4 million FDIC assessment reduction and $1.1 million in nonrecurring donations; normalized expense guidance for next quarter is approximately $113 million.
  • Capital ratios -- Tier 1 at 14.5% and total risk-based at 15.5%, both improving and above well-capitalized thresholds.
  • Common dividend and share repurchases -- $0.70-per-share common dividend declared, with $5 million repurchased at $65 per share and intention to increase repurchase volume to $15 million to $20 million next quarter.
  • Market share -- Achieved a 40-basis-point increase in 2025; Chairman Ho stated, "I don't really see a condition that would lead me to believe that [market share growth] is going to retard at all."
  • Loan pipeline outlook -- Commercial and residential pipelines are growing; management anticipates mid-single-digit loan growth in 2026.
  • CRE loan maturities -- Over 60% of CRE loans mature in 2030 or later, implying reduced near-term refinancing risk.
  • Deposit beta -- Improved from 28% to 31%, with management expectation to reach at least 35% at Fed funds terminal rate.
  • Tax rate -- 21.5% effective tax rate this quarter, projected to rise to 23% in 2026 based on forecasted discrete items.
  • Special-mention and classified loan balances -- Special-mention loans ended at $63.4 million, down $46.8 million year over year; total classified at $298.5 million.

Summary

Bank of Hawaii (BOH +6.09%) delivered earnings and profitability growth, with enhanced margin and expense controls contributing materially to results. Management executed successful deposit repricing and asset reallocation strategies, which improved net interest income performance amid moderating funding mix shifts. Commercial and consumer loan portfolios continue to benefit from geographic and product diversification, supporting stable credit quality and limited near-term refinancing exposure. Capital returns were prioritized with a resumed share-repurchase program and common dividend, while expense guidance signals disciplined cost management heading into 2026.

  • Chairman Ho indicated that market share gains may continue, stating, "I don't really see a condition that would lead me to believe that [market share growth] is going to retard at all."
  • Bradley S. Satenberg confirmed that fixed-asset repricing is expected to benefit net interest margin for "at least" the next two years, though the impact may diminish gradually.
  • Loan growth outlook for 2026 shifts to mid-single-digit range as commercial and residential pipelines show underlying improvement.
  • Deposit beta improvement signals better management in a declining-rate environment, with management expecting further gains as Fed rates settle.
  • The company plans to substantially increase share repurchases in the next quarter, reflecting confidence in capital strength and valuation.
  • Management guided to normalized noninterest income of $42 million to $43 million and noninterest expense of roughly $113 million in the upcoming quarter, emphasizing seasonal factors and normalization after one-time items.
  • More than 60% of commercial real estate loan maturities extend beyond 2030, reducing the risk of near-term refinancing pressures.

Industry glossary

  • NIM (Net interest margin): The difference between interest earned on assets and interest paid on liabilities, expressed as a percentage of average earning assets.
  • Deposit beta: Measures the change in a bank's deposit rates in relation to changes in market interest rates.
  • CRE (Commercial real estate): Loans secured by nonresidential property, such as office, retail, industrial, and multifamily buildings.
  • ACL (Allowance for credit losses): A reserve set aside for estimated losses on loans and leases, reflecting expected credit losses.
  • Spot rate on deposits: The current, actual cost of deposits at a specific point in time, as opposed to the average rate over a period.
  • Mix shift: Refers to the movement of deposits among various account types (e.g., from low-cost to higher-yielding products), impacting funding cost and margin.

Full Conference Call Transcript

Peter Ho: Thanks, Chang. Good morning or good afternoon, everyone. Thank you for your continued interest in Bank of Hawaii Corporation. We recorded yet another set of strong results in the fourth quarter. Fully diluted earnings per share was $1.39 per share, 63% higher than results from a year ago, and 16% higher than last quarter. Net interest margin improved for the seventh straight quarter, up 15 basis points to 2.61%. Return on common equity improved to 15%. Loans and deposits both grew modestly in the quarter. Importantly, noninterest bearing demand deposits grew 6.6% on a linked basis. Credit quality remained and remains pristine. I'll now touch on some operating highlights.

Brad Shairson will briefly update you on credit quality, and Bradley S. Satenberg will dive a little deeper into the financials. As you know, Bank of Hawaii Corporation has a unique business model that creates superior risk-adjusted returns by leveraging our unique core Hawaii market, our dominant brand and market position, and our fortress risk profile. Our market-leading brand position is largely the driver of our market share outperformance, giving us both a robust and durable competitive franchise advantage. Our brand advantage is built on our 125-plus year history in the island, our physical branch system, and increasingly our digital service, marketing, and commerce capabilities.

Over the past twenty years, Bank of Hawaii Corporation has delivered market share growth nearly four times greater than that of our next closest competitors. The market share growth continued in 2025, advancing another 40 basis points. We are the clear deposit market share leader in Hawaii. Interest bearing deposit costs improved by 20 basis points, and total cost of funds improved 16 basis points in the quarter. Also in the quarter, we remixed $659 million in fixed rate loans and investments from a roll-off rate of 4% and into a roll-on rate of 5.8%, helping to improve net interest margin. As I mentioned, Q4 was the seventh consecutive quarter of NIM expansion.

In early 2025, we had a goal of achieving a 2.50 NIM by year-end based on fixed asset repricing, improving deposit remix, and rate cuts. We were gratified to see NIM result for Q4 well exceeding that goal. We believe NIM by the 2026 could come in near the $2.90 range. Our Fortress Credit position is a long-standing strength of Bank of Hawaii Corporation. The portfolio is diversified by product type, predominantly secured and possessing superior long-term loss experience. We dynamically manage our credit portfolio, actively managing off loan categories that we find not to meet our stringent loss standards. And now let me turn the call over to Brad Shairson, who will provide a brief overview on credit. Brad?

Bradley Shairson: Thanks, Peter. I'll begin with an overview of our credit portfolio, and conclude with asset quality metrics. And as you will see, our performance has remained strong, consistent with prior quarters. Turning to our lending philosophy, the Bank of Hawaii Corporation is dedicated to serving our local communities, lending primarily within our core markets where our expertise allows us to make informed and disciplined credit decisions. Our portfolio is built on long-tenured relationships with approximately 60% of both our commercial and consumer clients having been with the bank for more than ten years. Geographically, our loan book is concentrated in markets we know well.

Approximately 93% of loans are based in Hawaii, with 4% in the Western Pacific and just 3% on the Mainland, primarily supporting existing clients who operate both locally and on the Mainland. Our loan portfolio remains well balanced between consumer and commercial exposure. Consumer loans represent 57% of total loans, or approximately $8 billion. Within the consumer portfolio, 86% consists of residential mortgage and home equity loans with a weighted average LTV of 48% and weighted average FICO score of 799. The remaining 14% of consumer loans are comprised of auto and personal lending. Credit quality in these segments also remain strong, with average FICO scores of 730 for auto loans and 761 for personal loans.

Turning to commercial lending, the portfolio totals $6.1 billion, representing 43% of total loans. 73% is secured by real estate with a weighted average LTV of 54%, reflecting our ongoing emphasis on collateral protection. CRE remains the largest component of commercial book, totaling $4.2 billion or 30% of total loans. And in Oahu, the state's largest CRE market, a combination of consistently low vacancy rates and flat inventory levels continue to support a stable real estate market. Across industrial, office, retail, and multifamily property types, vacancy rates remain below or close to their ten-year averages. Total office space on Oahu has declined by approximately 10% over the past decade, driven primarily by conversions to multifamily residential and lodging.

This structural reduction in supply combined with the return to office trend has brought vacancy rates closer to long-term averages and well below national levels. Our CRE portfolio remains well diversified with no single property type exceeding 8.5% of total loans. Conservative underwriting practices continue to be applied consistently with weighted average LTVs below 60% across all CRE categories. In addition, diversification within each segment remains strong, supported by modest average loan sizes. Scheduled maturities are also well balanced, with more than 60% of CRE loans maturing in 2030 or later, reducing near-term refinancing risk. Looking at the distribution of LTVs, there isn't much tail risk in our CRE portfolio. Only 1.6% of CRE loans have greater than 80% LTV.

C&I accounts for 11% of total loans. This portfolio is diversified across industries characterized by modest average loan sizes with very little leveraged lending. Turning to asset quality, credit metrics continued to perform exceptionally well. Net charge-offs totaled $4.1 million or 12 basis points annualized. That's up five basis points from linked quarter and two basis points higher year over year. Nonperforming assets declined to 10 basis points, down two basis points from linked quarter and four basis points year over year. Delinquencies increased to 36 basis points.

That's up seven basis points from linked quarter and up two basis points year over year, and criticized loans increased to 2.12% of total loans, up seven basis points from linked quarter and two basis points higher year over year. Notably, 86% of criticized assets are real estate secured with a weighted average LTV of 54%. And as an update on the allowance for credit losses on loans and leases, the ACL ended the quarter at $146.8 million. That's down $2 million from the linked quarter. The ratio of our ACL to outstandings dropped two basis points to 1.04%. I will now turn the call over to Bradley S. Satenberg for a discussion of our financial performance.

Bradley S. Satenberg: Thanks, Brad. For the quarter, we reported net income of $60.9 million and a diluted EPS of $1.39, an increase of $7.6 million and $0.19 per share compared to the linked quarter. These increases were primarily due to the continued expansion of our net interest income and our net interest margin. As Peter mentioned, this is the seventh consecutive quarter that we've expanded both our NII and NIM, and this quarter's expansion of $8.7 million and 15 basis points represents the most significant improvement during that stretch.

Driving this expansion is the successful repricing of our deposits, a $200 million securities repositioning that we executed in early October, as well as the deposit mix shift, which is a positive $100 million this quarter. This is the first time since 2022 after the Fed started raising rates that the mix shift had a positive impact on our earnings. As a reminder, the mix shift represents deposits shifting from noninterest bearing and low yielding deposits to higher cost deposits. Mix shift peaked at $967 million in 2023 and has moderated since then. During the year, the average quarterly mix shift was $25 million compared to $340 million in 2024.

During the quarter, the yield on interest earning assets declined modestly by one basis point. As floating rate assets repriced down in response to rate cuts during the latter half of the year. The impact of these rate cuts was almost entirely offset by the positive impact from our fixed asset repricing. While the yield on interest earning assets dipped modestly, the cost of our interest bearing liabilities improved by 19 basis points or 9% compared to the linked quarter. And was driven by the successful repricing of our deposits which declined by to 1.43% a 16 basis point reduction from the third quarter. In addition, our deposit beta improved from 28% to 31%.

And I remain optimistic that we will ultimately achieve a beta that at least 35% after Fed funds hits its terminal rate. It's also important to point out that we ended the quarter with a spot rate on our deposits of 1.3%. Or 13 basis points lower than our average cost during the quarter. Based on the spot rate, I anticipate another solid improvement in the cost of our deposits during the first quarter. Additionally, our CD book continues to reprice down, and during the fourth quarter, the average cost of our CDs declined by 22 basis points to 3.18%. During the next three months, 52% of our CDs will mature at an average rate of 3.1%.

The majority of these CDs are expected to renew into new CDs at rates ranging from two and a quarter to 3%. We made no changes to our interest rate swap portfolio during the quarter. We finished the year with an active pay fixed receive flow portfolio of $1.5 billion at a weighted average fixed rate of 3.5%. $1.1 billion of these swaps are hedging our loan portfolio, while $400 million are hedging our securities. In addition, we have $500 million of forward starting swaps at a weighted average fixed rate of 3.1%. $300 million of these forward swaps will become active during the 2026 while the remaining $200 million will become effective during the third quarter.

At the end of the year, our fixed float ratio remained stable at 57%. I believe that we are well positioned for any interest rate environment. Noninterest income was $44.3 million during the quarter compared to $46 million during the linked quarter. As I discussed last quarter, noninterest income in the fourth quarter was impacted by an $18.1 million gain on the sale of our merchant services portfolio which was largely offset by a $16.8 million loss incurred in connection with the repositioning of our investment portfolio. The current quarter also includes a $770,000 charge related to a Visa conversion ratio change while the linked quarter includes a similar Visa charge.

The third quarter also includes approximately $3 million of merchant services fee income that will not recur following the sale of that business. Adjusting for these normalizing items, noninterest income was essentially flat. My expectation is the first quarter normalized noninterest income will be between $42 million and $43 million. Noninterest expense was $109.5 million compared to $112.4 million during the linked quarter. Included in noninterest expense this quarter is a $1.4 million reduction in our FDIC special assessment as well as a nonrecurring $1.1 million donation to our Bank of Hawaii Foundation. The linked quarter includes a severance charge of $2.1 million and approximately $2.2 million of nonrecurring merchant services expenses.

Compared to my previous forecast, actualized actual normalized noninterest expense was higher than expected mainly due to additional incentives that were recorded during the period. 2026, I am forecasting that expenses will increase by between three and three and a half percent from our 2025 normalized expenses. And I anticipate that our first quarter normalized noninterest expense will be approximately $113 million. The first quarter generally tends to be elevated as compared to the rest of the year, to seasonal payroll taxes and incentive related charges. During the quarter, we also recorded a provision for credit losses $2.5 million which is unchanged from the linked quarter resulted in a coverage ratio of 1.04%.

Further, we reported a provision for taxes of $17 million during the quarter, resulting in an effective tax rate of 21.5%. I anticipate that our tax rate will be closer to 23% in 2026 due to the impact from forecasted discrete items. Our capital ratios remained above the well capitalized regulatory thresholds during the quarter with Tier one capital and total risk based capital improving to 14.5% and 15.5% respectively. And consistent with the linked quarter, we paid dividends of $28 million on our common stock and $5.3 million on our preferreds. Plus, we resumed our stock repurchase program in the fourth quarter and approximately $5 million of common shares at an average price of $65 per share.

I'm currently planning to increase the level of our repurchases next quarter. At the end of the year, $121 million remained available under the current plan. Finally, our board declared a dividend of $0.70 per common share that we paid during the first quarter. Now I'll turn the call back over to Peter.

Peter Ho: Thanks, Brad. This concludes our prepared remarks. Now we'd be happy to take whatever questions you might have.

Operator: Answer session. As a reminder to ask a question, you'll need to press 11 on your telephone and wait for your name to be announced. Withdraw your question, please press 11 again. Now first question comes from the line of Matthew Clark of Piper Sandler. Your line is now open.

Matthew Clark: Hey, good morning, everyone. Good morning. Just want to start on the noninterest bearing deposit growth this quarter. Good to see some strength there. Sounds like less mix shift, people seeking higher rate probably some seasonality too, but just you just drill down on that those balances there at the end of the year, whether or not that's sticky and what you're what your outlook is for growth, this year.

Peter Ho: Yeah, Matt. I think I think the fourth quarter might be a bit outsized. I mean, it was a 6% pickup in an IBD, but I think directionally, we've seen growth in that category for a few quarters now. And that's coming from a pretty balanced grouping of business segments participating. So commercial, our consumer folks are doing a good job bringing in sticky low cost deposits. So we would anticipate this probably continuing would be my sense, but probably not at that same clip of six, you know, six plus percent. That's probably little bit overstated. And I think there's probably some seasonality in there as you as you to.

Matthew Clark: Okay. Great. And then on the loan side, pretty much in line. Anything you're seeing there in the pipeline that would suggest any you'd you know, ideally like to get back to mid single digits? I don't know if that's realistic this year or not, just want to get a sense for the pipeline and your outlook there too.

Peter Ho: I'll let Jim cover that too. Yeah. I feel generally better about where our pipelines are at, but until we can get both consumer and commercial kind of both contributing to growth, I think we'd probably stick in the mid single you know, in the low single digits at this point. But I think there's opportunity to, improve as we work throughout the year. Yeah. But, I mean, I think to be clear, the you know, '25 was basically it was a flat year from a end of period standpoint year on year.

So I think that '26 at least from our forward vision into at least the first quarter, feels like it's going to be more of a kind of a mid single digit type of year for us. So, you know, a bit of an improvement, but still, you know, we still love to see growth accelerate there, obviously.

Matthew Clark: Okay. Great. And then just last one for me. Do you happen to have the your special mention in classified balances at the end of the year?

Bradley Shairson: I will take a look and see if I can get that for you. I don't have that offhand. Might come back to you in a minute or so on that.

Matthew Clark: Great. Thanks.

Operator: We're going for our next question. And our next question comes from the line of Jeffrey Allen Rulis of D. A. Davidson. Your line is now open.

Jeffrey Allen Rulis: Thanks. Good morning. A couple of questions on the margin. I just want to confirm that kind of update on the margin to reach near the two ninety range. That's a kind of end of year, not fourth quarter average of two ninety million Is that Is that correct?

Peter Ho: That's the way we're thinking about it, Jeff. That's right.

Jeffrey Allen Rulis: Okay. And do you happen to have the December margin average?

Bradley S. Satenberg: Yeah. We finished the year at, $2.67 so about six basis points above where we, you know, finished the fourth quarter in.

Jeffrey Allen Rulis: Great. And just on the sensitivity, it seems like that margin has been almost absent fed hasn't really impacted. It's kind of a mechanical increase. Would you say the same sensitivities or lack thereof? It's a pretty from your seat, looks like a pretty extended increase I guess, regardless of rate. Rate moves. Upcoming.

Peter Ho: Yeah. I would agree with that. I mean, I would say that any rate cuts that we see as long as they're orderly and sort of telegraphed, I think, we'll see a benefit from that. And then also, you look at the mix shift. And to the extent that we can keep that either moderated at, you know, breakeven or even positive, I think that'll actually contribute to margin as well.

Peter Ho: Yeah. Let me let me just add a little bit to that, Jeff. I think you know, what you saw in the quarter was the convergence of a number of things that were supportive of the margin expansion. Obviously, as you pointed to, the fixed asset repricing is mechanical. I mean, we just have assets coming off at lower yields than they're going back onto, which is a good thing, obviously. But you know, rate cuts did have a positive impact for us to the extent we get rate cuts moving forward. Think that's going to continue to be a positive for us.

And then also in the quarter, we had very strong as you know, we had strong deposit remix characteristics. So we're able to grow out the lower yielding NIVD in particular deposits. And if that if that continues to persist, that'll be another tailwind for us. And then finally, I'd say that I think that you know, certainly, effectively, there have been two you know, rate cut periods, twenty four and twenty five, I'd say that our ability to manage deposit pricing with the 25 vintage was materially better than 24. So I think team's gotten better at managing you know, a little more of a rate reduction cycle. And that's coming through on our on our betas.

Jeffrey Allen Rulis: Got it. Nice backdrop. If I could squeeze one more in just on the on the credit side with the ACL decline linked quarter, I wanna read much into it, but is there any sort of indication of a mix change or macro improvement? You kind of outlined the CRE firming up, but I just wanna touch on credit and potentially that reserve release if we should take anything from that.

Bradley Shairson: Sure. So and I will answer your other question as well. Related to special mention. Special mention, I'll start off with that and just say that special mention end of the fourth quarter was $63.4 million. That's actually a year over year change down $46.8 million. From the fourth quarter 2024. And then our total classified at $298.5 million. And, you know, as Peter mentioned earlier, credit quality remains pristine. During the quarter, I will mention that we had a charge off of just over $1 million related to a previously identified nonperforming asset. And as a result, you can see our NPA is the declined while net charge offs experienced a modest uptick.

This was obviously a idiosyncratic resolution rather than any sort of reflection of a broader credit stress. That's very clear. Absent this charge off, our credit quality metrics would have been pretty much, very similar to last quarter's performance. We do continue to see very strong underlying portfolio performance overall. And our we have stable trends across delinquencies, criticized assets, and any early stage indicators. And in addition to answer your second question, you know, the most recent UHERO economic forecast for the state of Hawaii reflects an improved outlook for 2026, and that's really what supports that reduction in the ACL coverage during the quarter. So we feel really good about how we're positioned right now.

Peter Ho: Well, an improved outlook coming off of what we previously had forecasted down Exactly. So they revised their downturn numbers up.

Bradley Shairson: That's right. Yeah.

Jeffrey Allen Rulis: Sounds good. Thank you.

Peter Ho: Great. Let's see you, Jeff.

Operator: Thank you. One moment for our next question. Comes from the line of Jared Shaw of Barclays. Your line is now open.

Jared Shaw: Thanks. Good morning.

Peter Ho: Morning, Jared.

Jared Shaw: Hey. Maybe just sticking back with the growth in DDA, it's a great quarter. Can you just give a little color on market share gain that you think from that versus just sort of improving customer backdrop? And then if we look at you know, the slide that shows the strength of sort of the market share gain over the last year and the last twenty years, is there a natural ceiling for that? Or do you think that you know, Bank of Hawaii Corporation can continue to you know, sort of take significant share here.

Peter Ho: I'll I'll address the second part of the question first. I like to believe that our historic performance is an indicator of what's possible for the future. We're you know, we think of Hawaii as our core and primary market. And we're always trying to figure out ways to serve our clients better whether it's on the consumer side or the commercial side. That's been met with pretty handsome market share pickups. So I just I don't really see a condition that would lead me to believe that's going to retard at all. Into the future. I mean, it's a competitive world. Things are changing. Products change. Consumer demands and sentiment changes.

And today, we've been pretty good at understanding how that plays through here in this marketplace. And I'd I'd hope that continues to continue on. As relating to the demand deposits growth from the past certainly this quarter and the past couple of quarters, prior I think it's this market feels like it's, you know, stable but not growing tremendously. So I don't know a lot of our operating deposits have come from just better economic outcome. That feels reasonably flat to me. I do think there's some cyclicality into the fourth quarter.

And I think, frankly, it's it takes a while for you know, the teams to really focus in on you know, whatever categories you're sending them to focus in on. And, you know, DDAs and deposits and DDAs in particular is an area that we have obviously put a lot of emphasis into as Fed funds has given that a good amount of profitability. I think we'll be able to see kind of the fruits of our labor there.

Jared Shaw: Okay. Thanks. Appreciate that color. Yes. Shifting maybe to the other side of the balance sheet. Talking about the low single digit loan growth opportunity, Could you just give a little color on what you're seeing in terms of commercial pipelines and what sort of the backdrop on the residential mortgage side could look like? Sure. Jimmy, you wanna cover that?

James Polk: Yeah. So maybe I'll start with commercial. You know, we've seen the pipeline build nicely through Q4. I think that's sets us up really, you know, in a more positive fashion in Q1. The activity's been on the commercial real estate side in our large commercial real estate business, but we've also seen some good growth in the pipeline in our middle market businesses. So I think it's it's more robust than just one area. We feel pretty good about that. On the resi side, you know, we had a really solid Q4 that was driven in part by an increase in overall purchase activity. Aided by, a couple projects that closed out during the quarter.

Pipeline remains pretty good going into Q1. And so I think, you know, as I said earlier, I think we feel better about overall loan activity. And, you know, I think we see the opportunity to move into the middle mid single digits as we work through the year.

Jared Shaw: Great. Thank you.

Operator: Thank you. One moment for our next question. And our next question comes from line of Andrew Tyrrell of Stephens. Your line is now open.

Andrew Tyrrell: Hey, good morning.

Peter Ho: Hey, Andrew.

Andrew Tyrrell: If I could just start on the margin, obviously, you know, another sounds like another year of a really good margin expansion. I'm just curious. Is that mostly fixed asset repricing driven? Do you do you assume or contemplate any securities restructuring within there? And then you know, as we look out beyond just, you know, the fourth quarter or 2026, does the fixed asset repricing benefit continue in 2027? Or starts to diminish somewhat?

Peter Ho: I'll let Brad touch on that. Yeah. I mean Generally, yes, but I'll let Brad once.

Bradley S. Satenberg: Yeah. I mean, just to start with the fixed asset repricing, I we believe we've got couple years at least, of that. I mean, you know, we think we'll still see an impact of it. It may start to diminish slowly, but, we'll continue to see that, you know, continue to have an impact over the next couple of years easily. As far as this quarter, I mean, did have fixed asset repricing and the securities repositioning, obviously. Had an impact, and then the rate cuts obviously, had an impact as well on the decrease in our cost of deposits. And so looking into the first quarter, I mean, I think we're continuing that momentum.

I think you'll see the NIM expand, maybe not to the same extent as you saw in the fourth quarter, but I still think we'll see a nice expansion with the, you know, the spot rates and our cost of deposits and then the December NIM, you know, going into January at $2.67. You know, I think we'll continue to see some good momentum with our NIM.

Andrew Tyrrell: Yep. Okay. And then just on the topic, do you have the total NI impacts of the swaps in the fourth quarter inclusive of the terminated hedges? I think you guys terminated last quarter.

Bradley S. Satenberg: The impact on our net interest income. The it was about Yep. Just over a million dollars for the quarter. And that includes the impact of the amortization of the termination costs.

Andrew Tyrrell: Got it. Okay. Thank you. And then last one for me, just sounds like you know, interested in picking up the buyback a bit here in the in the first quarter, but growth also sounds a little stronger as well on the loan side. Just remind us for comfortable at from a capital standpoint. And then just on the repurchase front, should we expect that becomes a more consistent part of the capital return story moving forward?

Peter Ho: I think as long as growth remains kind of in the in the tepid range, call it, We're gonna be looking to deploy capital into buybacks. We like you know, kinda where the price is from a from a purchase standpoint at least. So we were 5,000,000 last quarter I would anticipate that we'll be closer to the 15 to $20 million range moving forward per quarter.

Andrew Tyrrell: Great. Nice quarter. Thanks for taking the questions.

Peter Ho: Thank you. Take care.

Operator: Thank you. One more for next question. And our next question comes from the line of Kelly Ann Motta of KBW. Your line is now open.

Kelly Ann Motta: Hey, good morning. Thanks for the question. Most of mine have been asked and answered at this point. But, one area I did wanna touch on was these. You mentioned on your October earnings call about on the potential opportunity in wealth and ahead. And I appreciate the Q1 guidance of forty two to forty three. As you look ahead, can you perhaps share a bit about the opportunity on the fee side and kind of the cadence of potential pull through with that? Thank you.

James Polk: Sure. Should we wanna touch on that? Yeah. Sure, Peter. So, you know, as we've mentioned, we've spent the last couple years really building into our wealth opportunity. We've started to see some, good traction in internally, educational wise, participation wise, calling wise with our clients. We're doing a number of different engagement activities with clients just from a seminar type of perspective, and I think those things are really starting to help us to build the overall momentum. You can look at, you know, quarter over quarter, we had a little over 2% growth in fees on a linked quarter basis. And so I think that, production in Q4 was one of our highest levels in a while.

Pipeline remains, very strong from an investment perspective. So know, I think as we as we move forward getting into that 10 range, I think that was the guidance that we provided at the last call, even higher as we have more time to build into the opportunity. Think, you know, we feel pretty reasonable about that.

Kelly Ann Motta: Got it. That's that's, that's really helpful. And then on the expenses, just a minor housekeeping question. On the three to three and a half percent increase, I just wanna make sure I'm using the right normalized expense base to have you at about $4.41 in 2025. Is that Is that the right number to kind of build off of given that there's been a couple onetime items, especially here in the second half?

Bradley S. Satenberg: Hey, Kelly. This is Brad. Yeah. That's that's about right. I mean, I look at it somewhere between 40 $4.40 and $4.41.

Kelly Ann Motta: Got it. Thank you so much.

Peter Ho: Take care.

Operator: You. I'm showing no further questions at this time. I'd like to turn it back to Chang Park for closing remarks.

Chang Park: Thank you, everyone, for joining our call today. Thank you for your continued interest in Bank of Hawaii Corporation. As always, please feel free to reach out to me if you have any additional questions.

Bradley Shairson: Thank you so much.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.