Bank of Hawaii Corporation (BOH) Earnings Call Transcript & Summary

Welcome to the 2020 Annual Meeting for Bank of Hawaii Corporation. Our host for today's call is Peter Ho. [Operator Instructions] I would now like to turn the call to your host. Mr. Ho, you may begin.

Good morning. On behalf of our Board of Directors and management, I welcome you to this our 48th Annual Meeting of Shareholders and our first virtual shareholder meeting. Due to the global pandemic and our concern for the public's health and safety, we've determined that it was in the best interest of all to conduct our annual meeting virtually. It's our intent to conduct an in-person meeting, but it's safe to do so. It is now 8:30 and in accordance with the notice of meeting, I will call the meeting to order. Before we begin, I would like to recognize 2 very special individuals. Our Former Lead Independent Director and Chair of the Nominating Corporate Governance Committee, Mary Bitterman; and Former Vice Chairman of our Audit and Risk Committee, Bob Huret, who retired from the Board this year. Mary served 36 years and Bob served 20 years, and it's my great pleasure to work with both of them through this period. You'll find no finer people, no finer directors and no bigger contributor to our bank than either Mary or Bob. I'd like to thank them for their leadership and invaluable contributions over the years. Now I'd like to introduce the Board of Directors of Bank of Hawaii Corporation, who are all in attendance by phone. Beginning with our new Lead Independent Director, Raymond P. Vara; Haunani Apoliona; Mark Burak; John Erickson; Josh Feldman; New Director nominee, Michelle Hulst; Kent Lucien; Alicia Moy; Victor Nichols; Barbara Tanabe; New Director nominee, Dana Tokioka; and Bub Wo. Now I'd like to introduce our management team, beginning with our Vice Chairs, Sharon Crofts, Wayne Hamano, Jim Polk, Mark Rossi, Mary Sellers and Dean Shigemura. And our Senior Executive Vice Presidents, Sheh Bertram, Matt Emerson, Jill Higa, Ed Hudson, Susan Ing, Kristi Lefforge, Craig Norris and Dana Takushi. I'd also like to introduce Cliff Cammock and Nathan Lee representing Ernst & Young, our independent public accounting firm. You'll see the agenda on the meeting website as well as the link to the rules of conduct for the meeting. We appreciate your cooperation and abiding by the meeting rules. As a reminder, shareholders attending the virtual meeting can vote their shares online from now through the closing of the polls by clicking the Vote Here button on your screen. If you have previously voted by proxy and do not wish to change your vote, your vote will be cast as you previously instructed and no further action is required. During the business portion of the meeting, we will consider the following 3 proposals. Number one, the election of the company's directors. Number two, the advisory vote to approve the compensation for the named executive officers. And number three, the ratification to reappoint Ernst & Young to serve as the company's independent registered public accounting firm for 2020. We'll follow the formal business with our company report and current state of business. Following our report, you will have the opportunity to ask any questions. We have some shareholders who wish to address the meeting do so at this time -- at that time. Now let's proceed with the meeting. The Board of Directors fixed February 28, 2020, as a record date for determining the shares of common stock entitled to vote at this meeting. The company's Corporate Secretary has advised me that the meeting was called and proper notice was given to all shareholders of record. A copy of the notice of annual meeting and affidavit of mailing are on file. The number of shares represented in person or by proxy is 34,015,243 or 85% of the 40,053,210 shares issued and outstanding as of the record date. I hereby declare a quorum is present. We're a qualified to act on all matters set forth in the notice of meeting. Most of you have who returned your proxies authorized the persons named in the proxy to vote on all proposals coming before the meeting. You will now act on the recommendation -- we will now act on the recommendation to the Board of Directors relating to proposals listed in the proxy statement. The first proposal is the election of 13 directors. The 13 nominees will serve a 1-year term. They are as follows: Haunani Apoliona, Mark Burak, John Erickson, Joshua Feldman, myself, Peter Ho, Michelle Hulst, Kent Lucien, Alicia Moy, Victor Nichols, Barbara Tanabe, Dana Tokioka, Ray Vara and Robert Wo. As no other persons have been nominated in accordance with the company's governing documents, the nominations are now closed. The second proposal is to approve on an advisory basis the compensation of the named executive officers disclosed in this year's proxy statement. The final order of business is to ratify the reappointment of Ernst & Young as the company's independent registered public accounting firm for the fiscal year 2020. Before I report the preliminary vote results for these 3 proposals, as everyone who wants to vote cast their votes. [Voting]

It seems that all those desiring to vote have voted. I therefore declare the voting polls closed. I've been advised by our Inspectors of Election that in accordance with the proxies received from our shareholders, each of the Director nominees received a substantial majority of votes cast of at least 27,490,940 votes in favor or 97% of the votes cast. With respect to proposal 2 related to the advisory vote on executive compensation, 27,084,038 shares voted in favor or 96% of the votes cast. With respect to proposal 3 related to ratifying Ernst & Young as the company's 2020 independent registered public accounting firm, approximately 33,058,273 shares voted in favor or 98% of votes cast. Since we have received more than the majority vote in favor of each nominee and each proposal, I am therefore very pleased to announce that all 13 of the company's directors have been elected for a 1-year term, and the 2 remaining proposals have been approved as the Board recommended. The final results of the voting will be published in our Form 8-K and filed with the Securities and Exchange Commission. There being no further business to come before the meeting, this concludes the official business portion of the meeting. The 2020 Bank of Hawaii Corporation Annual Meeting is now adjourned. With that concluded, let me now share with you a few highlights for 2019. I'll then touch on our COVID-19 response, and then we will have time for questions and answers. 2019 was another strong year for Bank of Hawaii. Our company earned $226 million for a record $5.56 in diluted earnings per share. Our loans grew 5.2%, deposits grew a healthy 5%. Credit quality remains benign. Net charge-offs to average loans and leases totaled 12 basis points for 2019. Our efficiency, as measured by our efficiency ratio, improved to 55.7% from 56.7% in 2018. Tier 1 capital was a robust 12.2% at the end of the year. We were pleased to have increased the dividend twice in 2019, from $0.62 to $0.65 in the second quarter and then from $0.65 to $0.67 in the fourth quarter. In 2019, Moody's Investors Service affirmed our Aa2 bank deposit long-term rating. This places Bank of Hawaii in the top 10 of Moody's domestic bank universe, makes us the highest-rated bank rated by Moody's in the Hawaiian market. Also last year, D.A. Davidson recognized us as an industry leader in ESG practices. We were also recognized by Barron's for our environmental practices. And we were once again listed as one of America's Best Banks by Forbes magazine. We are pleased to report that our stock price appreciated 41.4% in 2019 as compared to 28.9% for the overall S&P 500 Index and 20.4% for the KBW Bank Stock Index. Let me now share with you some thoughts on our COVID-19 response. Bank of Hawaii was early in preparation for what was ultimately to become a generational challenge for both our nation and in the world. We had our first executive meeting on January 28. Over the course of February, we consulted with our Board and developed our COVID-19 strategic implementation plan, which was put in place on March 10. We moved to work from home -- to a work-from-home environment in our corporate facilities on March 18, ahead of the March 23 county mandated work-from-home policy. On March 25, we reduced our branch structure from 68 branches system-wide to 31. Our strategy focused on 3 important imperatives: first, of course, the health and safety of our employees; secondly, we're committed to providing for the financial services needs of our communities; and thirdly, we are especially committed to providing for the requirements of our customers who are essential service providers and an important part of our reemergence as a community. We believe the impact of COVID-19 will be substantial both in the near term and beyond. We do believe, however, the Bank of Hawaii is both well prepared and well positioned for this crisis. On Monday, on our earnings call, we provided a pretty thorough overview of our COVID-19 response. And so if you have further interest, please feel free to listen on that replay at boh.com. And now I'd be happy to answer your questions. I'd be happy to answer any questions you might have. We'll give it a couple of seconds. Well, it appears that there are no questions. So I want to thank you for your interest in Bank of Hawaii and for attending this -- our 48th Annual Meeting of Shareholders and our first virtual shareholders meeting. [Foreign Language] everybody. Thank you.

This now concludes today's meeting. Thank you for joining, and have a pleasant day.