Company: BOH
Filing Date: 2025-03-04
Form Type: 10-K
Source: 0000950170-25-031193
Chunk: 86

Company: BANK OF HAWAII CORP
Filing Date: 2025-03-04
Form: 10-K
Item: Item 1B
Chunk 86
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 increase was primarily due to a $11.1 million increase in the Allowance allocated to the commercial mortgage portfolio. The increase is primarily due to the impact of an increase in criticized balances and qualitative adjustments made to this portfolio.

The allocation of the Allowance to our consumer portfolio segment decreased by $7.7 million or 11% from the prior year. This reduction was primarily due to a $3.8 million decrease in the Allowance allocated to the residential mortgage portfolio and a $2.2 million decrease in the Allowance allocated to the home equity portfolio. The reductions were primarily due to lower loss forecasts, due to lower production and improved unemployment rate forecast for the State of Hawaiʻi.

See Note 4 in Item 8. “Notes to Consolidated Financial Statements” for more information on the Allowance and credit quality indicators.

Reserve for Unfunded Commitments

The Unfunded Reserve was $2.1 million as of December 31, 2024, and $6.0 million as of December 31, 2023, a decrease of $3.9 million, which was primarily due to the impact of slightly lower historical loss rates and lower unfunded commitments.

Provision for Credit Losses

The provision for credit losses was $11.2 million for the year ended December 31, 2024 compared to $9.0 million in the prior year. The increase in the provision was due to a higher provision for the Allowance for loans and leases, partially offset by a lower provision for the Unfunded Reserve. 

Other Credit Risks

In the normal course of business, we serve the needs of state and political subdivisions in multiple capacities, including traditional banking products such as deposit services, and by investing in municipal debt securities. The carrying value of our municipal debt securities was $63.9 million as of December 31, 2024, and $63.8 million as of December 31, 2023. We also maintained investments in corporate bonds with a carrying value of $682.2 million as of December 31, 2024, and $669.2 million as of December 31, 2023. We are exposed to credit risk in these investments should the issuer of a security be unable to meet its financial obligations. This may result in the issuer failing to make scheduled interest payments and/or being unable to repay the principal upon maturity.

Our use of derivative financial instruments exposes the Company to counterparty credit risk. See Note 17 in Item