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Business Segments
 9 Months Ended
Sep. 30, 2025
Segment Reporting [Abstract]  
Business Segments Business Segments
The Company’s business segments are defined as Consumer Banking, Commercial Banking, and Treasury and Other. The Company’s chief operating decision maker (“CODM”) is the Chairman and Chief Executive Officer. The CODM uses income from operations to evaluate the performance of the overall business and to allocate resources to each of the segments.
The Company's internal management accounting process, which is not necessarily comparable with the process used by any other financial institution, uses various techniques to assign balance sheet and income statement amounts to the business segments, including allocations of income, expense, the provision for credit losses, and capital. This process is dynamic and requires certain allocations based on judgment and other subjective factors. Unlike financial accounting, there is no comprehensive authoritative guidance for management accounting that is equivalent to GAAP. Previously reported results have been reclassified to conform to the current reporting structure.
The net interest income of the business segments reflects the results of a funds transfer pricing process that matches assets and liabilities with similar interest rate sensitivity and maturity characteristics and reflects the allocation of net interest income related to the Company’s overall asset and liability management activities on a proportionate basis. The basis for the allocation of net interest income is a function of the Company’s assumptions that are subject to change based on changes in current interest rates and market conditions. Funds transfer pricing also serves to transfer interest rate risk to Treasury. However, the other business segments have some latitude to retain certain interest rate exposures related to customer pricing decisions within guidelines.
The provision for credit losses for the Consumer Banking and Commercial Banking business segments reflects the actual net charge-offs of those business segments. The amount of the consolidated provision for loan and lease losses is based on the CECL methodology that the Company used to estimate our consolidated Allowance. The residual provision for credit losses to arrive at the consolidated provision for credit losses is included in Treasury and Other.
Noninterest income and expense include allocations from support units to business units. These allocations are based on actual usage where practicably calculated or by management’s estimate of such usage.
The provision for income taxes is allocated to business segments using a 26% effective income tax rate. However, the provision for income taxes for the Leasing business unit (included in the Commercial Banking segment) and Auto Leasing portfolio and Pacific Century Life Insurance business unit (both included in the Consumer Banking segment) are assigned
their actual effective income tax rates due to the unique relationship that income taxes have with their products. The residual income tax expense or benefit to arrive at the consolidated effective tax rate is included in Treasury and Other.
Consumer Banking
Consumer Banking offers a broad range of financial products and services, including loan and lease financing, deposit, and brokerage and insurance products; private banking and international client banking services; trust services; investment management; and institutional investment advisory services. Loan and lease products include residential mortgage loans, home equity lines of credit, automobile loans and leases, overdraft lines of credit, installment loans, small business loans and leases, and credit cards. Deposit products include checking, savings, and time deposit accounts. Brokerage and insurance offerings include equities, mutual funds, life insurance, and annuity products. Private banking (including international client banking) and Trust groups assist individuals and families in building and preserving their wealth by providing investment, credit, and trust services to high-net-worth individuals. The investment management group manages portfolios utilizing a variety of investment products and the institutional client services group offers investment advice to corporations, government entities, and foundations. Products and services from Consumer Banking are delivered to customers through 51 branch locations and 322 ATMs throughout Hawai‘i and the West Pacific, a customer service center, and online and mobile banking services.
Commercial Banking
Commercial Banking offers products including commercial and industrial loans, commercial real estate loans, commercial lease financing, auto dealer financing, merchant services, deposit products and cash management services. Commercial lending and lease financing, deposit products, and cash management and merchant services are offered to middle-market and large companies in Hawai‘i and the West Pacific. Commercial Banking also offers lease financing and deposit products to government entities in Hawai‘i. Commercial real estate mortgages focus on investors, developers, and builders predominantly domiciled in Hawai‘i. Commercial Banking includes international banking which services Japanese, Korean, and Chinese commercial businesses owned by a foreign individual or entity, a U.S. corporate subsidiary of a foreign owner, or businesses where management prefers to speak a foreign language.
Treasury and Other
Treasury consists of corporate asset and liability management activities, including interest rate risk management and a foreign currency exchange business. This segment’s assets and liabilities (and related interest income and expense) consist of interest-bearing deposits, investment securities, federal funds sold and purchased, and short and long-term borrowings. The primary sources of noninterest income are from bank-owned life insurance, net gains from the sale of investment securities, and foreign exchange income related to customer-driven currency requests from merchants and island visitors. The net residual effect of the transfer pricing of assets and liabilities is included in Treasury and Other, along with the elimination of intercompany transactions.
Other organizational units (Technology, Operations, Marketing, Human Resources, Finance, Credit and Risk Management, and Corporate and Regulatory Administration) provide a wide range of support to the Company’s other income earning segments. Expenses incurred by these support units are charged to the business segments through an internal cost allocation process. The cost allocation is included in Other Noninterest Expense in the following table.
Selected business segment financial information as of and for the three and nine months ended September 30, 2025 and 2024, were as follows:
(dollars in thousands)Consumer BankingCommercial BankingTreasury and OtherConsolidated Total
Three Months Ended September 30, 2025
Net Interest Income (Expense)$95,948$54,196$(13,469)$136,675
Provision for (Recapture of) Credit Losses2,578(1)(77)2,500
Net Interest Income (Expense) After Provision for Credit Losses93,37054,197(13,392)134,175
Noninterest Income33,8709,5502,54645,966
Salaries and Benefits21,3185,10336,48462,905
Net Occupancy7,3923963,14410,932
Other Noninterest Expense58,41213,759(33,621)38,550
Noninterest Expense87,12219,2586,007112,387
Income (Loss) Before Provision for Income Taxes40,11844,489(16,853)67,754
Provision (Benefit) for Income Taxes10,20011,398(7,189)14,409
Net Income (Loss)$29,918$33,091$(9,664)$53,345
Total Assets as of September 30, 2025$8,282,239$6,120,551$9,611,819$24,014,609
Three Months Ended September 30, 2024 ¹
Net Interest Income (Expense)$97,919$50,556$(30,857)$117,618
Provision for (Recapture of) Credit Losses3,058772(830)3,000
Net Interest Income (Expense) After Provision for Credit Losses94,86149,784(30,027)114,618
Noninterest Income34,1337,7863,19145,110
Salaries and Benefits20,4195,03533,17258,626
Net Occupancy6,8644753,46710,806
Other Noninterest Expense57,42913,315(33,084)37,660
Noninterest Expense84,71218,8253,555107,092
Income (Loss) Before Provision for Income Taxes44,28238,745(30,391)52,636
Provision (Benefit) for Income Taxes11,2899,816(8,827)12,278
Net Income (Loss)$32,993$28,929$(21,564)$40,358
Total Assets as of September 30, 2024$8,308,389$5,952,321$9,538,464$23,799,174
1.Certain prior period information has been reclassified to conform to current presentation.
(dollars in thousands)Consumer BankingCommercial BankingTreasury and OtherConsolidated Total
Nine Months Ended September 30, 2025
Net Interest Income (Expense)$286,911$163,719$(58,465)$392,165
Provision for (Recapture of) Credit Losses8,4921,106(598)9,000
Net Interest Income (Expense) After Provision for Credit Losses278,419162,613(57,867)383,165
Noninterest Income101,34923,44810,022134,819
Salaries and Benefits63,45515,400108,242187,097
Net Occupancy21,6011,1989,19131,990
Other Noninterest Expense175,24341,176(101,877)114,542
Noninterest Expense260,29957,77415,556333,629
Income (Loss) Before Provision for Income Taxes119,469128,287(63,401)184,355
Provision (Benefit) for Income Taxes30,36232,813(23,787)39,388
Net Income (Loss)$89,107$95,474$(39,614)$144,967
Total Assets as of September 30, 2025$8,282,239$6,120,551$9,611,819$24,014,609
Nine Months Ended September 30, 2024 ¹
Net Interest Income (Expense)$293,118$152,934$(99,650)$346,402
Provision for (Recapture of) Credit Losses8,2181,239(2,057)7,400
Net Interest Income (Expense) After Provision for Credit Losses284,900151,695(97,593)339,002
Noninterest Income99,76821,2788,436129,482
Salaries and Benefits61,49315,63696,745173,874
Net Occupancy20,4761,34310,00231,821
Other Noninterest Expense172,45938,499(94,476)116,482
Noninterest Expense254,42855,47812,271322,177
Income (Loss) Before Provision for Income Taxes130,240117,495(101,428)146,307
Provision (Benefit) for Income Taxes33,15429,711(27,390)35,475
Net Income (Loss)$97,086$87,784$(74,038)$110,832
Total Assets as of September 30, 2024$8,308,389$5,952,321$9,538,464$23,799,174
1Certain prior period information has been reclassified to conform to current presentation.