PUBLIC DISCLOSURE August 8, 2016 COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION Bank of Hawaii RSSD # 795968 130 Merchant Street Honolulu, Hawaii, 96813 Federal Reserve Bank of San Francisco 101 Market Street San Francisco, California 94105 NOTE: This document is an evaluation of this institution’s record of meeting the credit needs of its entire community, including low‐ and moderate‐income neighborhoods, consistent with the safe and sound operation of the institution. This evaluation is not, nor should it be construed as, an assessment of the financial condition of this institution. The rating assigned to this institution does not represent an analysis, conclusion or opinion of the federal financial supervisory agency concerning the safety and soundness of this financial institution. Bank of Hawaii CRA Public Evaluation Honolulu, Hawaii August 8, 2016 TABLE OF CONTENTS INSTITUTION RATING ................................................................................................ 1 Institution’s CRA Rating ....................................................................................................... 1 INSTITUTION ........................................................................................................... 2 Description of Institution ..................................................................................................... 2 Scope of Examination .......................................................................................................... 3 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS ..................................................... 5 Lending Test ........................................................................................................................ 5 LENDING ACTIVITY ..................................................................................................................................... 5 ASSESSMENT AREA CONCENTRATION ............................................................................................................ 7 GEOGRAPHIC AND BORROWER DISTRIBUTION ................................................................................................. 7 COMMUNITY DEVELOPMENT LENDING ........................................................................................................ 10 Investment Test ................................................................................................................. 10 Service Test ....................................................................................................................... 12 COMMUNITY DEVELOPMENT SERVICES ....................................................................................................... 13 Fair Lending or Other Illegal Practices Review ................................................................... 14 STATE OF HAWAII .................................................................................................. 15 CRA Rating for Hawaii ........................................................................................................ 15 Scope of Examination ........................................................................................................ 15 Description of Operations in Hawaii .................................................................................. 16 Conclusions with Respect to Performance Tests in Hawaii ............................................... 19 Honolulu Assessment Area Conclusions ............................................................................ 20 DESCRIPTION OF OPERATIONS IN HONOLULU ............................................................................................... 20 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN HONOLULU ............................................................. 26 TERRITORY OF GUAM .............................................................................................. 33 CRA Rating for Guam ......................................................................................................... 33 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN GUAM ................................................................... 37 ISLAND OF SAIPAN (COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS) ..................... 42 CRA Rating for Saipan ........................................................................................................ 42 Scope of Examination ........................................................................................................ 42 Description of Operations in Saipan .................................................................................. 42 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN SAIPAN .................................................................. 45 TERRITORY OF AMERICAN SAMOA .............................................................................. 48 CRA Rating for American Samoa ........................................................................................ 48 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN AMERICAN SAMOA .................................................. 51 Limited‐Scope Assessment Area Conclusions .................................................................... 53 i Bank of Hawaii CRA Public Evaluation Honolulu, Hawaii August 8, 2016 APPENDICES Appendix A: Scope of Examination Appendix B: Summary of Ratings Appendix C: Glossary of Terms Appendix D: Limited‐Scope Assessment Area Market Profiles Appendix E: CRA Core Tables ii Bank of Hawaii CRA Public Evaluation Honolulu, Hawaii August 8, 2016 INSTITUTION RATING Institution’s CRA Rating Bank of Hawaii (BOH) is rated "OUTSTANDING.” The following table shows the performance level of Bank of Hawaii with respect to the lending, investment, and service tests. PERFORMANCE TESTS PERFORMANCE LEVELS LENDING INVESTMENT SERVICE TEST* TEST TEST OUTSTANDING X X X HIGH SATISFACTORY LOW SATISFACTORY NEEDS TO IMPROVE SUBSTANTIAL NONCOMPLIANCE * The lending test is weighted more heavily than the investment and service tests in determining the overall rating. The major factors supporting the institution’s rating include: Lending levels that reflect excellent responsiveness to assessment area credit needs, with a substantial majority of loans made within the bank’s assessment areas Overall good geographic distributions of loans, with notable levels of small business, motor vehicle, and secured consumer loans in low‐ and moderate‐income areas Overall adequate distributions of loans among borrowers of different income levels and businesses of different sizes Leadership in making community development loans and use of flexible lending programs that are responsive to affordable housing and small business credit needs, and the need to retain jobs in low‐ and moderate‐income areas Excellent levels of qualified community development investments and grants that are responsive to affordable housing needs and support non‐profit community service organizations serving low‐ and moderate‐income individuals Excellent levels of responsive community development services and readily accessible retail banking services that are tailored to the convenience and needs of BOH’s assessment areas Page 1 of 53 Bank of Hawaii CRA Public Evaluation Honolulu, Hawaii August 8, 2016 INSTITUTION Description of Institution BOH, with $15.9 billion in total assets as of June 30, 2016, is a state‐chartered commercial bank headquartered in Honolulu, Hawaii. BOH is the primary subsidiary of Bank of Hawaii Corporation, a bank holding company. The bank and its subsidiaries provide a variety of financial services to businesses, consumers, and governments in Hawaii, Guam, and Saipan and on a limited basis in American Samoa. BOH operates 71 full‐service branches throughout its assessment areas and an agency facility in American Samoa. Hawaii is the bank’s primary operating area with 68 branches in the state. The bank also operates two branches in Guam and one in Saipan. On November 30, 2012, management announced its plans to exit the American Samoa market converting the one remaining branch into an agency facility on August 30, 2016. As an agency office, BOH is precluded from originating loans in American Samoa. For the bank as a whole, the number of branches declined by four; with 13 branches closed and nine branches opened since the previous examination. Eight branches opened and six closed in the state of Hawaii, four branches closed in Guam, and two branches closed and one branch opened in Saipan. In addition to its retail branch network, BOH operates 12 residential loan offices, 15 small business centers, and nine corporate commercial banking centers for larger business needs that are located throughout BOH’s assessment areas. The bank’s strategy is to continue to build on the strengths of the company’s core markets of Hawaii and the Pacific Islands of Guam and Saipan. As a regional financial services company, BOH’s areas of emphasis include mortgage and retail banking, commercial and small business banking, and investment services. The bank has a significant presence in most of its markets and business lines, generally ranking either first or second in terms of market share. The composition of the loan portfolio as of December 31, 2015, is shown in Exhibit 1. The loan mix is reflective of the bank’s focus on mortgage, business, and consumer lending, with mortgage lending being a major concentration. EXHIBIT 1 LOANS AND LEASES AS OF DECEMBER 31, 2015 Loan Type $ (‘000s) % Secured by 1‐4 Family Residential Real Estate