Company: BOH
Filing Date: 2025-10-28
Form Type: 10-Q
Source: 0000046195-25-000037
Chunk: 101

Company: BANK OF HAWAII CORP
Filing Date: 2025-10-28
Form: 10-Q
Item: Part I, Item 1
Chunk 101
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ance for Credit Losses (the “Allowance”)

As of September 30, 2025, the Allowance was $148.8 million or 1.06% of total loans and leases outstanding compared with an Allowance of $148.5 million or 1.06% of total loans and leases outstanding December 31, 2024. The Allowance as of September 30, 2025 and December 31, 2024, includes a qualitative overlay to account for economic uncertainty and downside risk of a recession.

Net charge-offs on loans and leases for the three and nine months ended September 30, 2025 were $2.6 million or 0.07% and $9.6 million or 0.09%, respectively of total average loans and leases on an annualized basis, compared to $3.8 million or 0.11% and $9.5 million or 0.09% of total average loans and leases on an annualized basis for the three and nine months ended September 30, 2024, respectively.

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Reserve for Unfunded Commitments

The Unfunded Reserve was $1.3 million as of September 30, 2025, a decrease of $0.8 million or 40% from December 31, 2024, primarily due to lower unfunded commitments in our construction portfolio. The reserve for unfunded commitments is recorded in other liabilities in the unaudited consolidated statements of condition.

Provision for Credit Losses

For the nine months ended September 30, 2025, the provision for credit losses was $9.0 million, compared to $7.4 million for the same respective period last year. The increase in the provision for credit losses for the nine months ended September 30, 2025 was primarily due to a smaller recapture in the reserve for unfunded commitments, which was driven by a smaller change in our unfunded commitment balance.

Market Risk

Market risk is the potential of loss arising from adverse changes in interest rates and prices. We are exposed to market risk as a consequence of the normal course of conducting our business activities. Our market risk management process involves measuring, monitoring, controlling, and mitigating risks that can significantly impact our consolidated statements of income and condition. In this management process, we balance market risks with expected returns to enhance earnings performance while managing volatility to an acceptable level.

Our primary market risk exposure is interest rate risk.

Interest Rate Risk

The objective