BANK OF HAWAII CORP (BOH)

Item 2. Management’s Discussion and Analysis (“MD&A”) of Financial Condition and Results of Operations

The following MD&A is intended to help the reader understand the Company and its operations and is focused on our financial results for the second quarter of 2026, including comparisons of year-to-year performance, trends, and updates from the Company’s most recent 10-K filing. Discussion and analysis of our 2025 fiscal year, as well as the year-to-year comparison between fiscal years 2025 and 2024, are included in Part II, Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 24, 2026.

Forward-Looking Statements

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts and may include statements concerning, among other things, the anticipated economic and business environment in our service area and elsewhere, credit quality and other financial and business matters in future periods, our future results of operations and financial position, our business strategy and plans and our objectives and future operations. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. We also may make forward-looking statements in our other documents filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”). In addition, our senior management may provide forward-looking statements orally to analysts, investors, representatives of the media and others. Given these risks and uncertainties, you should not place undue reliance on any forward-looking statement as a prediction of our actual results.

Our forward-looking statements are based on numerous assumptions, any of which could prove to be inaccurate, and actual results may differ materially from those projected due to global economic conditions and a variety of risks and uncertainties, including, but not limited to: (1) Our business is sensitive to regional business and economic conditions, in particular those of Hawaiʻi, Guam and other Pacific Islands; (2) Our loan portfolio is largely secured by real estate, and a downturn in the real estate market may adversely affect our results of operations; (3) Significant changes to the size, structure, powers and operations of the federal government, the effects of any prolonged shutdown of the federal government, changes to U.S. economic policies, and uncertainties regarding the potential for these changes may cause economic disruptions that could, in turn, adversely impact our business, results of operations and financial condition; (4) A sustained period of high inflation could pose a risk to local economies and the financial performance of the Bank; (5) Climate change and the governmental responses to it could have a material adverse impact on the Bank and its customers; (6) Disruptions, instability and failures in the banking industry may negatively impact us; (7) Any reduction in defense spending by the federal government in the state of Hawaiʻi could adversely impact the economy in Hawaiʻi and the Pacific Islands; (8) Changes in interest rates could adversely impact our results of operations and capital; (9) Our allowance for credit losses may prove to be insufficient to absorb losses or appropriately reflect, at any given time, the inherent risk of loss in our loan portfolio; (10) Consumer protection initiatives and court decisions related to the foreclosure process affect our remedies as a creditor; (11) Changes in the capital markets could materially affect the level of assets under management and the demand for our other fee-based services; (12) The Parent’s liquidity is dependent on dividends from the Bank; (13) There can be no assurance that the Parent will continue to declare cash dividends; (14) Fiscal and monetary policy changes may significantly impact our profitability and liquidity; (15) Legislation and regulatory initiatives affecting the financial services industry, including new interpretations, restrictions and requirements, could detrimentally affect the Company’s business; (16) Changes in income tax laws and interpretations, or in accounting standards, could materially affect our financial condition or results of operations; (17) A failure in or breach of our operational systems, information systems, or infrastructure, or those of our third-party vendors and other service providers, may result in financial losses, loss of customers, or damage to our reputation; (18) An interruption or breach in security of our information systems or those related to merchants and third-party vendors, including as a result of cyber-attacks, could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, or result in financial losses; (19) Our mortgage banking income may experience significant volatility; (20) Our mortgage loan servicing business may be impacted if we do not meet our obligations, or if servicing standards change; (21) Risks related to representation and warranty provisions may impact our mortgage loan servicing business; (22) Risks relating to residential mortgage loan servicing activities may adversely affect our results; (23) The requirement to record certain assets and liabilities at fair value may adversely affect our financial results (24) Natural disasters and adverse weather in Hawaiʻi and the Pacific Islands may negatively affect real estate property values and our operations (25) Competition may adversely affect our business; (26) Our future performance will depend on our ability to respond timely to technological change; (27) The development and use of AI present risks and challenges that may adversely impact our business; (28) Negative public opinion could damage our reputation and adversely impact our earnings and liquidity (29) We are subject to certain litigation, and our expenses related to this litigation may adversely affect our results; (30) Our performance depends on attracting and retaining key employees and skilled personnel to operate our business

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effectively; (31) The soundness of other financial institutions may adversely impact our financial condition or results of operations; and (32) We have experienced increases in FDIC insurance assessments.

The risks and uncertainties that could cause actual results to differ materially from our historical experience and our expectations and projections include but are not limited to those described in Item 1A. “Risk Factors,” Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in our most recent Annual Report on Form 10-K and in subsequent SEC filings. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by the federal securities laws.

Investor Announcements

Investors and others should note that the Company intends to announce financial and other information to the Company’s investors using the Company’s investor relations website at https://ir.boh.com, social media channels, press releases, and public conference calls and webcasts, all for purposes of complying with the Company’s disclosure obligations under Regulation FD. Accordingly, investors should monitor these channels, as information is updated, and new information is posted.

Critical Accounting Estimates

Our Unaudited Consolidated Financial Statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and follow general practices within the industries in which we operate. Application of GAAP requires us to make estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Most accounting estimates are not considered by management to be critical accounting estimates. Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. In determining which accounting estimates are critical accounting estimates, we consider, among other things, whether the application of GAAP requires management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and whether it is likely that materially different results would be reported under different conditions or different assumptions. The accounting estimates that we believe are most critical in preparing our Consolidated Financial Statements are presented in the section titled “Critical Accounting Estimates” in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes in the Company’s application of critical accounting estimates since December 31, 2025.

Overview

We are a regional financial services company serving businesses, consumers, and governments in Hawai‘i, Guam, and other Pacific Islands. Our principal operating subsidiary, the Bank, was founded in 1897.

Our business strategy is to use our unique market knowledge, prudent management discipline and brand strength to deliver exceptional value to our stakeholders. Our business plan is balanced between growth and risk management while maintaining flexibility to adjust to economic changes. We will continue to focus on providing customers with best-in-class service and an innovative mix of products and services. We will also remain focused on delivering strong financial results while maintaining prudent risk and capital management strategies and affirming our commitment to support our local communities.

Hawai‘i Economy

Hawai‘i’s near-term economic outlook has weakened due to the Iran war's impact on oil prices, which is expected to raise inflation, increase travel costs, and slow growth in key visitor source markets. Jet fuel prices have roughly doubled recently, resulting in significant transpacific airfare increases and prompting some airline capacity reductions. Japanese travel demand remains constrained by the historically weak yen. Despite these challenges, total visitor arrivals are projected to increase modestly in 2026, although growth is expected to slow in 2027. Hawai‘i’s labor market remains stable but stagnant. Statewide payroll growth was flat through the second quarter of 2026 and there was a slight contraction in the labor force. Construction continues to be a bright spot, supported by federal projects, Maui wildfire rebuilding efforts, and development of the New Aloha Stadium Entertainment District. The real estate market remains soft, with slow resale activity and declining condominium prices.

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For the first six months of 2026, the median price of single-family home sales on Oahu increased by 2.6% while the median price of condominiums increased by 1.5% compared to the same period in 2025. The volume of single-family homes sales on Oahu increased 3.9% and condominium sales decreased 2.3% compared to the same period in 2025. Inventory of single-family homes and condominiums on Oahu was 3.2 months and 7.0 months, respectively, for the second quarter of 2026.

Earnings Summary

Net income for the second qu

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following MD&A is intended to help the reader understand the Company and its operations and is focused on our fiscal 2025 and 2024 financial results, including comparisons of year-to-year performance between these years. Discussion and analysis of our 2023 fiscal year, as well as the year-to-year comparison between fiscal 2024 and 2023, are included in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 4, 2025.

Forward-Looking Statements

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts and may include statements concerning, among other things, the anticipated economic and business environment in our service area and elsewhere, credit quality and other financial and business matters in future periods, our future results of operations and financial position, our business strategy and plans and our objectives and future operations. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. We also may make forward-looking statements in our other documents filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”). In addition, our senior management may provide forward-looking statements orally to analysts, investors, representatives of the media and others. Given these risks and uncertainties, you should not place undue reliance on any forward-looking statement as a prediction of our actual results.

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Our forward-looking statements are based on numerous assumptions, any of which could prove to be inaccurate, and actual results may differ materially from those projected because of a variety of risks and uncertainties, including, but not limited to: (1) Our business is sensitive to regional business and economic conditions, in particular those of Hawaiʻi, Guam and other Pacific Islands; (2) Our loan portfolio is largely secured by real estate, and a downturn in the real estate market may adversely affect our results of operations; (3) Significant changes to the size, structure, powers and operations of the federal government, the effects of any prolonged shutdown of the federal government, changes to U.S. economic policies, and uncertainties regarding the potential for these changes may cause economic disruptions that could, in turn, adversely impact our business, results of operations and financial condition; (4) A sustained period of high inflation could pose a risk to local economies and the financial performance of the Bank; (5) Climate change and the governmental responses to it could have a material adverse impact on the Bank and its customers; (6) Disruptions, instability and failures in the banking industry may negatively impact us; (7) Any reduction in defense spending by the federal government in the state of Hawaiʻi could adversely impact the economy in Hawaiʻi and the Pacific Islands; (8) Changes in interest rates could adversely impact our results of operations and capital; (9) Our allowance for credit losses may prove to be insufficient to absorb losses or appropriately reflect, at any given time, the inherent risk of loss in our loan portfolio; (10) Consumer protection initiatives and court decisions related to the foreclosure process affect our remedies as a creditor; (11) Changes in the capital markets could materially affect the level of assets under management and the demand for our other fee-based services; (12) The Parent’s liquidity is dependent on dividends from the Bank; (13) There can be no assurance that the Parent will continue to declare cash dividends; (14) Fiscal and monetary policy changes may significantly impact our profitability and liquidity; (15) Legislation and regulatory initiatives affecting the financial services industry, including new interpretations, restrictions and requirements, could detrimentally affect the Company’s business; (16) Changes in income tax laws and interpretations, or in accounting standards, could materially affect our financial condition or results of operations; (17) A failure in or breach of our operational systems, information systems, or infrastructure, or those of our third-party vendors and other service providers, may result in financial losses, loss of customers, or damage to our reputation; (18) An interruption or breach in security of our information systems or those related to merchants and third-party vendors, including as a result of cyber-attacks, could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, or result in financial losses; (19) Our mortgage banking income may experience significant volatility; (20) Our mortgage loan servicing business may be impacted if we do not meet our obligations, or if servicing standards change; (21) Risks related to representation and warranty provisions may impact our mortgage loan servicing business; (22) Risks relating to residential mortgage loan servicing activities may adversely affect our results; (23) The requirement to record certain assets and liabilities at fair value may adversely affect our financial results (24) Natural disasters and adverse weather in Hawaiʻi and the Pacific Islands may negatively affect real estate property values and our operations (25) Competition may adversely affect our business; (26) Our future performance will depend on our ability to respond timely to technological change; (27) The development and use of AI present risks and challenges that may adversely impact our business; (28) Negative public opinion could damage our reputation and adversely impact our earnings and liquidity (29) We are subject to certain litigation, and our expenses related to this litigation may adversely affect our results; (30) Our performance depends on attracting and retaining key employees and skilled personnel to operate our business effectively; (31) The soundness of other financial institutions may adversely impact our financial condition or results of operations; and (32) We have experienced increases in FDIC insurance assessments.

The risks and uncertainties that could cause actual results to differ materially from our historical experience and our expectations and projections include but are not limited to those described in Item 1A. “Risk Factors,” Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Annual Report on Form 10-K and in subsequent SEC filings. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by the federal securities laws.

Critical Accounting Estimates

Our Consolidated Financial Statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and follow general practices within the industries in which we operate. The most significant accounting policies we follow are presented in Note 1 in Item 8. “Notes to Consolidated Financial Statements.” Application of GAAP requires us to make estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Most accounting estimates are not considered by management to be critical accounting estimates. Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. In determining which accounting estimates are critical accounting estimates we consider, among other things, whether the

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application of GAAP requires management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and whether it is likely that materially different amounts would be reported under different conditions or using different assumptions. The accounting estimates that we believe to be most critical in preparing our Consolidated Financial Statements are those that are related to the determination of the reserve for credit losses, fair value estimates, and income taxes. Additional information is presented in Note 1 in Item 8. “Notes to Consolidated Financial Statements.”

Reserve for Credit Losses

A consequence of lending activities is that we may incur credit losses. The amount of such losses will vary depending upon the risk characteristics of the loan and lease portfolio as affected by economic conditions.

The reserve for credit losses consists of the allowance for credit losses (the “Allowance”) and the reserve for unfunded commitments (the “Unfunded Reserve”). Accounting estimates related to the reserve for credit losses are considered to be critical as these estimates involve considerable subjective judgment and estimation by management. These estimates are in accordance with Accounting Standards Codification (“ASC”) Topic 326 (“ASC 326”) Financial Instruments - Credit Losses. In the case of loans and leases, the Allowance is a contra-asset valuation account, calculated in accordance with ASC 326, that is deducted from the amortized cost basis of loans and leases to present the net amount expected to be collected. In the case of off-balance-sheet credit exposures, the Unfunded Reserve is a liability account, calculated in accordance with ASC 326, reported as a component of other liabilities in our consolidated statements of condition.

The estimate of expected credit losses is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. We then consider whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used. These adjustments can include accounting for new or discontinued products, changes in our portfolio composition, delinquency trends, and with forecasted economic conditions including but not limited to unemployment, real estate market conditions (e.g. prices, sales activity and inventory), visitor arrivals, and the uncertainty of other events (local, national and global). The Unfunded Reserve represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby letters of credit. The Unfunded Reserve is determined by estimating future draws and applying the expected loss rates on those draws. However, a liability is not recognized for commitments unconditionally cancelable by the Company.

The historical loss experience for the commercial portfolio segment is primarily determined by using a Cohort method. This method pools loans and leases into groups (“cohorts”) sharing similar risk characteristics based on product and risk ratings, and tracks each cohort’s historical net charge-offs to calculate a historical loss rate. The historical loss rates for each cohort are then averaged to calculate an overall historical loss rate which is applied to current loan balances to arrive at the quantitative baseline portion of the Allowance for most of the commercial portfolio segment.

The historical loss experience for the consumer portfolio segment is primarily determined by using a Vintage method. This method measures historical loss behavior in the form of a historical loss rate for homogenous loan pools that originated in the same period, known as a vintage. The historical loss rates are then applied to origination loan balances by vintage to determine the quantitative baseline portion of the Allowance for most of the consumer portfolio segment. The homogenous loan pools are segmented according to similar risk characteristics (e.g., residential mortgage, home equity) and may be sub-segmented further based on historical loss behavior. For example, we sub-segment residential mortgages by geography and home equity by lien position.

We also consider qualitative adjustments to the quantitative baseline such as the impact of current environmental factors at the reporting date that did not exist over the period from which historical experience was used. Relevant factors include, but are not limited to, concentrations of credit risk, such as geography, industry, real estate property type; and economic trends and conditions, such as Hawaiʻi unemployment, real estate prices and market conditions, and visitor arrivals. We also consider changes in underwriting standards, and levels and trends in delinquencies and criticized loans and leases.

We also incorporate a reasonable and supportable (“R&S”) loss forecast period, which is currently one year, to account for the effect of forecasted economic conditions and other factors on the performance of the loan portfolios, which could differ from historical loss experience. We also perform asset quality reviews which include a review of forecasted gross charge-offs and recoveries, nonperforming assets, criticized loans and leases, and risk rating migration. The results of the asset quality review are used to consider qualitative adjustments to the quantitative baseline. After the one-year R&S loss

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forecast period, this adjustment assumes an immediate reversion to historical loss rates for the remaining expected life of the loan.

The company utilizes the University of Hawaiʻi Economic Research Organization (“UHERO”) macroeconomic forecast that is updated quarterly based on economic conditions and events. The forecast includes various economic variables for Hawaiʻi such as gross domestic product (“GDP”), unemployment rate, visitor arrivals, residential real estate market conditions, personal income, and inflation rate. We also utilize other forecast tools for broader U.S. economic variables such as interest rates, and apply any overlays to the R&S loss forecast as relevant.

The reserve for credit losses is generally sensitive to economic conditions and assumptions given the impact for potential losses for the consumer portfolio and risk rating migration for the commercial portfolio. For the consumer portfolio, as an example, an increase in the forecasted Hawaiʻi unemployment rate could lead to an increase in the rate of delinquencies and consequently charge-offs for consumer borrowers. For the Allowance at December 31, 2025, a 25-basis point increase in the forecasted Hawaiʻi unemployment rates would have increased the qualitative component of the Allowance for consumer loans by an estimated $1.2 million. For the commercial portfolio, the impact of adverse changes in economic conditions on borrowers will vary, and generally evaluated on a case-by-case basis to include the borrower’s existing and expected financial capacity. Borrowers that would be most adversely impacted are identified as having the potential for migrating from a Pass to a Classified risk rating. For the Allowance at December 31, 2025, a 50-basis point increase in the percentage of commercial loans risk rated as Classified would increase the quantitative component of the Allowance for commercial loans by an estimated $2.1 million. This sensitivity analysis is hypothetical and provided only to indicate the potential impact changes in economic conditions and assumptions may have on the Allowance estimate. Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others.

The Unfunded Reserve is determined by estimating future draws and applying the expected loss rates on those draws. Future draws are based on historical averages of utilization rates (i.e., the likelihood of draws taken). To estimate future draws on unfunded balances, current utilization rates are compared to historical utilization rates. If current utilization rates are below historical utilization rates, the rate difference is applied to the committed balance to estimate the future draw. Expected loss rates are estimated using the loss rates calculated for the corresponding loan category in the Allowance. For the commercial portfolio, the historical loss rates were calculated utilizing the Cohort methodology, while the consumer portfolio utilized the Vintage methodology.

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market inputs. For financial instruments that are traded actively and have quoted market prices or observable market inputs, there is minimal subjectivity involved in measuring fair value. However, when quoted market prices or observable market inputs are not fully available, significant management judgment may be necessary to estimate fair value. In developing our fair value measurements, we maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value hierarchy defines Level 1 valuations as those based on quoted prices, unadjusted, for identical instruments traded in active markets. Level 2 valuations are those based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or model-based valuation techniques for which all significant assumptions are observable in the market. Level 3 valuations are based on model-based techniques that use at least one significant assumption not observable in the market, or significant management judgment or estimation, some of which may be internally developed.

Financial assets that are recorded at fair value on a recurring basis include available-for-sale investment securities, loans held for sale, mortgage servicing rights, investments related to deferred compensation arrangements, and derivative financial instruments. As of December 31, 2025 and 2024, $3.6 billion or 15% and $2.9 billion or 12%, respectively, of our total assets consisted of financial assets recorded at fair value on a recurring basis and most of these financial assets consisted of available-for-sale investment securities measured using information from a third-party pricing service. These investments in debt securities and mortgage-backed securities were all classified in either Levels 1 or 2 of the fair value hierarchy. Financial liabilities that are recorded at fair value on a recurring basis are comprised of derivative financial

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instruments. As of December 31, 2025 and 2024, $107.2 million and $154.1 million, respectively, or less than 1% of our total liabilities consisted of financial liabilities recorded at fair value on a recurring basis.

As of December 31, 2025 and 2024, Level 3 financial assets recorded at fair value on a recurring basis were $0.6 million and $0.7 million, respectively, or less than 1% of our total assets, and were comprised primarily of mortgage servicing rights and derivative financial instruments. As of December 31, 2025 and 2024, there were no Level 3 financial liabilities recorded at fair value on a recurring basis.

We also use third-party pricing services to assist our management in determining the value of securities. Our third-party pricing service makes no representations or warranties that the pricing data provided to us is complete or free from errors, omissions, or defects. As a result, we have processes in place to monitor and periodically review the information provided to us by our third-party pricing service such as: 1) Our third-party pricing service provides us with documentation by asset class of inputs and methodologies used to value securities. We review this documentation to evaluate the inputs and valuation methodologies used to place securities into the appropriate level of the fair value hierarchy. This documentation is periodically updated by our third-party pricing service. Accordingly, transfers of securities within the fair value hierarchy are made if deemed necessary. 2) On a quarterly basis, management also selects a sample of securities priced by the Company’s third-party pricing service and reviews the significant assumptions and valuation methodologies used by the pricing service with respect to those securities. The information provided is comprised of market reference data, which may include reported trades; bids, offers, or broker-dealer dealer quotes; benchmark yields and spreads; as well as other reference data as appropriate. Periodically, based on these reviews, management determines whether the current placement of the security in the fair value hierarchy is appropriate or whether transfers may be warranted. 3) On a quarterly basis, management reviews the pricing information received from our third-party pricing service. This review process includes a comparison to a second source. 4) Our third-party pricing service has also established processes for us to submit inquiries regarding quoted prices. Periodically, we will challenge the quoted prices provided by our third-party pricing service. Our third-party pricing service will review the inputs to the evaluation in light of the new market data presented by us. Our third-party pricing service may then affirm the original quoted price or may update the evaluation on a going forward basis. Generally, we do not adjust the price from the third-party service provider. 5) On an annual basis, we obtain and review the third party’s most recently issued Service Organization Controls report related to controls placed in operation and tests of operating effectiveness, to update our understanding of the third-party pricing service’s control environment.

See Note 20 in Item 8. “Notes to Consolidated Financial Statements” for more information on our fair value measurements.

Income Taxes

We determine our liabilities for income taxes based on current tax regulations and interpretations in tax jurisdictions where our income is subject to taxation. Currently, we file tax returns for federal, five state and local domestic jurisdictions, and three foreign jurisdictions. In estimating income taxes payable or receivable, we assess the relative merits and risks of the appropriate tax treatment considering statutory, judicial, and regulatory guidance in the context of each tax position. Accordingly, previously estimated liabilities are regularly reevaluated and adjusted through the provision for income taxes. Changes in the estimate of income taxes payable or receivable occur periodically due to changes in tax rates, interpretations of tax law, the status of examinations being conducted by various taxing authorities, and newly enacted statutory, judicial and regulatory guidance that impact the relative merits and risks of each tax position. These changes, when they occur, may affect the provision for income taxes as well as current and deferred income taxes, and may be significant to our consolidated statements of income and condition.

Management’s determination of the realization of net deferred tax assets is based upon management’s judgment of various future events and uncertainties, including the timing, character and amount of future income, as well as the implementation of various tax planning strategies to maximize realization of the deferred tax assets. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. As of December 31, 2025 and 2024, we carried a valuation allowance of $13.3 million and $9.7 million, respectively, related to our deferred tax assets established in connection with our low-income housing investments.

We are also required to record a liability, referred to as an unrecognized tax benefit (“UTB”), for the entire amount of benefit taken in a prior or future income tax return when we determine that a tax position has a less than 50% likelihood of being accepted by the taxing authority. As of December 31, 2025 and 2024, our liabilities for UTBs were $3.5 million and $5.3 million, respectively.

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Overview

We are a regional financial services company serving businesses, consumers, and governments in Hawaiʻi, Guam, and other Pacific Islands. Our principal operating subsidiary, the Bank, was founded in 1897.

Our business strategy is to use our unique market knowledge, prudent management discipline and brand strength to deliver exceptional value to our stakeholders. Our business plan is balanced between growth and risk management while maintaining flexibility to adjust to economic changes. We will continue to focus on providing customers with best-in-class service and an innovative mix of products and services. We will also remain focused on continuing to deliver strong financial results while maintaining prudent risk and capital management strategies as well as our commitment to support our local communities.

Hawaiʻi Economy

As of December 31, 2025, Hawai‘i’s economy faces a challenging environment though conditions have been less severe than earlier anticipated. Tourism continues to soften, with declines in the U.S. mainland market and ongoing weakness in international arrivals, despite modest gains from Japan and Maui’s gradual recovery. Construction remains a key source of stability, supported by major federal contracts and infrastructure projects helping to offset weakness in other sectors. The recent increase in the state minimum wage has boosted incomes for lower-wage workers, however, inflationary pressures continue to build as tariff costs pass through to consumer prices. Federal employment reductions and the 2025 government shutdown have added strain, yet Hawai‘i’s unemployment rate remains low relative to national levels. Hawai‘i’s unemployment rate was 2.2% in December 2025, which was below the U.S. unemployment rate of 4.4%.

The median price of single-family home and condominium sales on Oahu increased by 3.5% and decreased by 1.5%, respectively, in 2025 compared to the prior year. The volume of single-family homes sales on Oahu increased 3.5% and condominium sales decreased 1.1% in 2025 compared to the prior year. Inventory of single-family homes and condominiums on Oahu was 2.6 months and 5.9 months, respectively, for December 2025.

Earnings Summary

Net income for 2025 was $205.9 million, an increase of $55.9 million, or 37.3%, compared to the prior year. Diluted earnings per common share were $4.63 in 2025, an increase of $1.17, or 33.8%, compared to the prior year. Our return on average assets was 0.87% in 2025, an increase of 23 basis points from 2024, and our return on average shareholders’ equity was 11.86% in 2025, compared to 9.78% in the prior year.

•The return on average common equity for 2025 was 13.29% compared to 10.85% for the prior year.

•Net interest income was $537.5 million in 2025, an increase of $71.0 million compared to the prior year.

•Net interest margin was 2.45% in 2025, an increase of 29 basis points from the prior year.

•Noninterest income was $179.1 million in 2025, an increase of 3.8% from the prior year, which included an $18.1 million gain related to the sale of our merchant services portfolio partially offset by a $16.8 million loss on the sale of investments in connection with the repositioning of our investment securities portfolio.

•Noninterest expense was $443.1 million in 2025, an increase of 3.0% compared to the prior year.

•The effective tax rate for 2025 was 21.41% compared with 24.19% for the prior year.

•Total non-performing assets were $14.2 million as of December 31, 2025, a decrease of $5.1 million from the prior year. The ratio of non-performing assets to total loans and leases and foreclosed real estate was 0.10% at December 31, 2025, a decrease of 4 basis points from the prior year.

•Net loan and lease charge-offs in 2025 were $13.7 million or 10 basis points of total average loans and leases outstanding. Net loan and lease charge-offs in 2025 were comprised of charge-offs of $19.0 million partially offset by recoveries of $5.3 million. Compared to 2024, net loan and lease charge-offs increased by $0.8 million or 1 basis point on total average loans and leases outstanding.

•The allowance for credit losses on loans and leases was $146.8 million as of December 31, 2025, an increase of $1.8 million from the prior year. The ratio of the allowance for credit losses to total loans and leases outstanding was 1.04% at December 31, 2025, down 2 basis points from the prior year.

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•Total assets were $24.2 billion as of December 31, 2025, an increase of 2.4% from the prior year.

•The investment securities portfolio was $7.8 billion as of December 31, 2025, an increase of $0.4 billion or 6.1% from the prior year. The portfolio remains largely comprised of securities issued by U.S. government agencies and U.S. government-sponsored enterprises. Floating rate securities represented 18.1% of the investment securities portfolio as of December 31, 2025, compared to 16.5% as of December 31, 2024.

•Total loans and leases were $14.1 billion as of both December 31, 2025 and 2024.

•Total deposits were $21.2 billion as of December 31, 2025, an increase of 2.7% from the prior year.

•Total shareholders’ equity was $1.9 billion as of December 31, 2025, an increase of 11.0% from the prior year.

•During 2025, we repurchased 76,547 shares of common stock at a total cost of $5.0 million under the share repurchase program. Total remaining buyback authority under the share repurchase program was $121.0 million as of December 31, 2025.

•We maintained a quarterly dividend of $0.70 per common share throughout 2025 and 2024.

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Analysis of Consolidated Statements of Income

Average balances, related income and expenses, and resulting yields and rates, on a taxable-equivalent basis, are presented in Table 1. An analysis of the change in net interest income, on a taxable-equivalent basis, is presented in Table 2.

1.Due to rounding, the amounts presented in this schedule may not tie to other amounts presented elsewhere in this report.

2.Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 21% of $6.4 million and $3.8 million for the years ended December 31, 2025, and 2024, respectively.

3.Non-performing loans and leases are included in the respective average loan and lease balances.

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1.The change in interest income or expense due to both rate and volume has been allocated between the factors in proportion to the relationship of the absolute dollar amounts of the change in each.

Net Interest Income

Net interest income is affected by the size and mix of our balance sheet components as well as the spread between interest earned on assets and interest paid on liabilities. Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets.

The average balances of our earning assets increased by $407.2 million or 2% in 2025 compared to the prior year, primarily due to increases in the average balances of available-for-sale (“AFS”) investment securities and commercial mortgage loans. Yields on our investment securities portfolio increased by 14 basis points, primarily due to the

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amortization of lower yielding investments being reinvested into new investments at higher interest rates. This increase was partially offset by lower income earned from interest rate swaps that hedge a portion of our AFS securities portfolio. Yields on our loan and lease portfolio increased by 6 basis points due to higher rates on home equity lines and automobile loans originated, partially offset by the payoffs of higher yielding commercial mortgage and commercial and industrial loans, and the impact of lower rates on our floating rate commercial loans.

The average balances of our interest-bearing liabilities increased by $233.7 million or 1% in 2025 compared to the prior year due to an increase in savings deposits. As compared to the same period last year, the cost of our interest-bearing liabilities decreased by 33 basis points during the year ended December 31, 2025, primarily due to a decrease in the prevailing interest rate environment, which was driven by 175 basis points of interest rate cuts by the Federal Open Market Committee from September 2024 through December 2025.

Noninterest Income

Table 3 presents the major components of noninterest income for 2025 and 2024.

Fees, exchange, and other service charges decreased by $0.9 million or 1.6% in 2025 compared to the prior year, primarily due to the sale of our merchant services portfolio in October 2025 partially offset by an increase in fees generated from our commercial mortgage portfolio. The noninterest income generated from our merchant services portfolio during the years ended December 31, 2025 and 2024 was $8.7 million and $11.3 million, respectively.

Investment securities losses increased by $15.9 million or 211.6% in 2025 compared to the prior year, primarily due to a $16.8 million realized loss on the sale of certain securities in connection with the repositioning of $208.4 million AFS securities during the quarter ended December 31, 2025.

Other income increased by $19.8 million or 100.3% in 2025 compared to the prior year. The increase was primarily due to a one-time gain of $18.1 million as we sold the economic interests of our merchant services portfolio during the quarter ended December 31, 2025.

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Noninterest Expense

Table 4 presents the major components of noninterest expense for 2025 and 2024.

Total salaries and benefits expense increased by $16.2 million or 7.0% in 2025 compared to the prior year primarily due to increases in base salaries, which is generally attributable to increases in merit, incentive compensation attributed to our improved financial performance during the year, and separation expense.

Data processing expense increased by $2.4 million or 12.5% in 2025 compared to the prior year primarily due to an increase in data services fees related to the additional costs incurred in connection with outsourcing.

Professional fees expense decreased by $3.1 million or 16.0% in 2025 compared to the prior year primarily due to a decrease in consulting and outsourcing costs incurred.

FDIC insurance expense decreased by $6.7 million or 37.4% in 2025 compared to the prior year, primarily due to a partial reduction of the FDIC special assessment in 2025.

Total other expense increased by $4.6 million or 8.0% in 2025 compared to the prior year primarily due to a $1.1 million donation to the Bank of Hawaii Foundation, and an increase in pension and post-retirement expenses, telephone charges, travel expenses, and broker’s charges, partially offset by a decrease in merchant transactions and card processing fees.

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Income Taxes

Table 5 presents our provision for income taxes and effective tax rates for 2025 and 2024:

The provision for income taxes was $56.1 million in 2025, an increase of $8.2 million compared to the prior year. The effective tax rate for 2025 was 21.41%, a decrease from 24.19% for the prior year. The lower effective tax rate in 2025 compared to the prior year was primarily due to a decrease in nondeductible compensation, and increases in tax benefits related to low-income housing investments, as well as a change in discrete items.

In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, permanently extending several tax provisions originally introduced under the 2017 Tax Cuts and Jobs Act that were set to expire at the end of 2025. The OBBBA also introduced changes to certain U.S. corporate tax rules, most of which take effect in 2026. We have evaluated the impact of the OBBBA and do not expect any material changes to our effective tax rate or results of operations.

Analysis of Business Segments

Our business segments are Consumer Banking, Commercial Banking, and Treasury and Other. Table 6 summarizes net income from our business segments for 2025 and 2024. Additional information about segment performance is presented in Note 12 in Item 8. “Notes to Consolidated Financial Statements.”

Consumer Banking

Net income decreased by $11.1 million or 9% in 2025 compared to the prior year, primarily due to an increase in noninterest expense and a decrease in net interest income. This was partially offset by an increase in noninterest income. Noninterest expense increased by $9.7 million or 3%, primarily due to higher salaries and benefits expenses, mobile and online banking platform costs, operational losses, card production costs, temporary service expenses, and allocated administrative and support unit costs. Net interest income decreased by $7.2 million or 2%, primarily due to lower deposit spreads on higher deposit balances. Noninterest income increased by $1.4 million or 1%, primarily due to increases in trust and asset management income, monthly service fees, overdraft fees, and credit card commissions, partially offset by a decrease in mortgage banking income.

Commercial Banking

Net income increased by $22.7 million or 19% in 2025 compared to the prior year, primarily due to an increase in net interest income and noninterest income, and a decrease in noninterest expense. Net interest income increased by $13.6 million or 6%, primarily due to an increase in loan balances, primarily in commercial mortgages, as well as a net increase in allocated interest income related to increases in balances and spreads on interest-bearing and savings deposits, partially offset by a decline in noninterest-bearing deposit balances and allocated interest income. Noninterest income increased by $18.3 million or 64%, primarily due to a one-time payment on the sale of the Bank’s merchant services portfolio in the fourth quarter, higher customer derivative program revenue, loan and commitment fees, analyzed deposit account fees and a one-time gain on sale of leased assets, partially offset by a reduction in merchant revenues and terminal rentals due to the sale of the portfolio. Noninterest expense decreased by $0.6 million or 1%, primarily due to lower merchant transaction

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processing fees, salaries and benefits, occupancy and equipment expenses, and fewer operational losses in the period, partially offset by increases in data processing, professional services, and allocated administrative, support unit and branch expenses.

Treasury and Other

Net loss decreased by $44.3 million or 45% in 2025 compared to the prior year, primarily due to a decrease in net interest expense, partially offset by a decrease in noninterest income and an increase in noninterest expense. Net interest expense decreased by $64.5 million or 97%, primarily due to lower funding costs and an increase in interest income from higher asset yields. Noninterest income decreased by $13.1 million or 143%, primarily due to a loss on sale of $208.4 million of investment securities in conjunction with the fourth quarter portfolio repositioning transaction, partially offset by increases in other income and bank-owned life insurance income. The provision for credit losses and income taxes in this business segment represents the residual amounts to arrive at the total amount for the Company.

Analysis of Consolidated Statements of Condition

Cash and Cash Equivalents

Cash and cash equivalents were $946.5 million as of December 31, 2025, an increase of $182.9 million or 24.0% from the prior year. The increase was primarily due to a net increase in deposits partially offset by an increase in our investment portfolio.

Investment Securities

The carrying value of our investment securities portfolio was $7.8 billion and $7.3 billion as of December 31, 2025 and 2024, respectively. The increase was primarily due to the purchase of $1.3 billion in available-for-sale investment securities during the year ended December 31, 2025, of which $392.9 million were floating rate securities. The increase was partially offset by the amortization of existing securities.

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Table 7 presents the maturity distribution at amortized cost, weighted-average yield to maturity, and fair value of our investment securities.

1Weighted-average yields on investment securities available-for-sale are based on amortized cost.

2Information for mortgage-backed securities, collateralized mortgage obligations, and small business administration securities reflect weighted average life, including anticipated future prepayments.

We continually evaluate our investment securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability, and level of interest rate risk to which we are exposed. These evaluations may cause us to change the level of funds deployed into investment securities, change the composition of our investment securities portfolio, and change the proportion of investments made into the available-for-sale and held-to-maturity investment categories.

Mortgage-backed securities issued by Ginnie Mae, Fannie Mae, and Freddie Mac continue to be the largest concentrations in the portfolio. As of December 31, 2025, the issuers of these securities carry credit ratings equivalent to those of the U.S. Government, reflecting the explicit and/or implicit guarantees provided, and have a long history of zero credit loss.

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Gross unrealized gains in our investment securities portfolio were $12.0 million and $1.3 million as of December 31, 2025 and 2024, respectively. Gross unrealized losses in the investment securities portfolio were $751.9 million and $1.1 billion as of December 31, 2025 and 2024, respectively. The decrease in gross unrealized losses was primarily due to a decrease in prevailing interest rates year over year. In addition, the Company recognized $16.8 million of gross losses on sales of AFS securities during the fourth quarter of 2025 as part of a repositioning of the Company’s AFS securities portfolio.

As of December 31, 2025, we had the intent and ability to hold these securities and do not expect to be required to sell them before recovering their amortized cost basis, which may occur at maturity. See Note 2 in Item 8. “Notes to Consolidated Financial Statements” for more information.

The Company’s corporate debt securities as of December 31, 2025, had a fair value of $744.3 million. Of this total, $8.7 million was fully guaranteed by the U.S. government. Of the remaining $735.6 million of corporate bonds, all were credit-rated A- or better by at least one nationally recognized statistical rating organization.

Loans and Leases

Table 8 presents the composition of our loan and lease portfolio by major categories.

Commercial loans and leases were $6.1 billion as of December 31, 2025, a decrease of $38.5 million or 0.6% from the prior year, primarily due to our commercial and industrial and construction portfolios amortizing and paying down at a faster rate than new loan production.

Consumer loans and leases were $8.0 billion as of December 31, 2025, an increase of $44.6 million or 0.6% from the prior year, primarily due to higher new loan originations within our residential mortgages.

Loans and Leases - Commercial

The commercial loan and lease portfolio is comprised of commercial mortgages, commercial and industrial loans, construction loans, and lease financing. Commercial mortgage and construction loans are offered to real estate investors, developers, and builders primarily domiciled in Hawaiʻi. Commercial mortgage loans are secured by first mortgages on commercial real estate at loan-to-value ratios generally not exceeding 75%. Commercial properties are well diversified among property types, with primary concentrations in multi-family, industrial, retail and lodging. The primary source of repayment for investor property is cash flow from the property and for owner-occupied property is the operating cash flow from the business.

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Table 9 presents an additional breakdown of the Company’s commercial mortgage portfolio.

1.Amount includes unamortized loan origination fees.

Commercial and industrial loans are made primarily to corporations, middle market, and small businesses for the purpose of financing equipment acquisitions, expansion, working capital, and other general business purposes. Construction loans are made for the purchase or construction of a property for which repayment will be generated by the property. We classify loans as construction until the completion of the construction phase. Following construction, if a loan is retained, the loan is reclassified to the commercial mortgage category. Lease financing consists of sales-type leases used by commercial customers to finance capital purchases. Although our primary market is Hawaiʻi, the commercial portfolio contains loans to some borrowers based on the U.S. Mainland, including some Shared National Credits, which have a business connection to Hawaiʻi or are associated with a Hawaiʻi customer relationship.

Loans and Leases - Consumer

The consumer loan and lease portfolio is comprised of residential mortgage loans, home equity lines and loans, indirect auto loans, and other consumer loans including direct installment loans and indirect auto leases. These products are generally offered in the geographic markets we serve. Our residential mortgage loan portfolio is primarily comprised of fixed-rate loans concentrated in Hawaiʻi. We also offer a variety of home equity lines and loans, which are primarily secured by first lien mortgages on residential property of the borrower. Automobile lending activities include loans and leases secured by new or used automobiles. We originate automobile loans and leases on an indirect basis through selected dealerships. Direct installment loans are generally unsecured and are primarily used for personal expenses or for debt consolidation.

See Note 3 in Item 8. “Notes to Consolidated Financial Statements” and the “Corporate Risk Profile – Credit Risk” section of Item 7. MD&A for more information on our loan and lease portfolio.

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Table 10 presents the geographic distribution of our loan and lease portfolio.

1For secured loans and leases, classification as U.S. Mainland is made based on where the collateral is located. For unsecured loans and leases, classification as U.S. Mainland is made based on the location where the majority of the borrower’s business operations are conducted.

Our commercial and consumer lending activities are concentrated primarily in Hawai‘i and the West Pacific. Our commercial loan and lease portfolio to borrowers based on the U.S. Mainland includes participation in shared national credits for customers whose operations and assets extend beyond Hawai‘i.

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Table 11 presents a maturity distribution for selected loan categories.

1.Based on contractual maturities.

2.Amount includes adjustable rate loans of $2.4 billion that are still in their fixed rate period.

Goodwill

Goodwill was $31.5 million as of December 31, 2025, and 2024. As of December 31, 2025, based on our qualitative assessment, there were no reporting units where we concluded that the fair value of a reporting unit was less than its carrying amount, including goodwill. See Note 1 in Item 8. “Notes to Consolidated Financial Statements” for more information on our goodwill impairment policy.

Other Assets

Other assets were $632.0 million as of December 31, 2025, a decrease of $104.9 million or 14% from the prior year. The fair value of derivative financial instruments decreased by $61.9 million or 38.3% due to changes in interest rates from December 2024 to December 2025, decreasing the valuation of customer swaps and fair value hedges. Deferred tax assets and tax receivable decreased by $34.1 million or 20% primarily due to temporary book-to-tax differences related to unrealized losses on investment securities. See Note 6 in Item 8. “Notes to Consolidated Financial Statements” for more information on the composition of our other assets.

Deposits

Table 12 presents the components of our deposits by major customer categories as of December 31, 2025, and 2024.

Total deposits were $21.2 billion as of December 31, 2025, an increase of $555.5 million or 2.7% from the prior year. Consumer deposits increased by $68.8 million due to increases of $185.2 million in savings deposits and $47.2 million in noninterest-bearing deposits, partially offset by a decrease of $163.6 million in time deposits and interest-bearing demand deposits. Commercial deposits increased by $297.7 million primarily from an increase of $349.2 million in noninterest-bearing deposits, interest-bearing demand deposits, and time deposits, partially offset by a decrease of $51.5 million in savings. Public and other deposits increased by $188.9 million due to an increase of $242.5 million in savings and $158.6

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million in interest-bearing demand deposits, partially offset by a decrease of $201.8 million in time deposits and $10.4 million in noninterest-bearing deposits.

Table 13 presents the components of our savings deposits as of December 31, 2025, and 2024.

The increase in Regular Savings was primarily due to increases in public deposits of $242.5 million, consumer deposits of $200.9 million, and commercial deposits of $5.7 million. The decrease in Money Market was primarily due to decreases in commercial deposits of $57.2 million and consumer deposits of $15.7 million.

Table 14 presents the maturity distribution of the estimated uninsured time deposits as of December 31, 2025, and 2024.

Uninsured amounts are estimated based on the portion of account balances in excess of FDIC insurance limits.

Securities Sold Under Agreements to Repurchase

Securities sold under agreements to repurchase were $50.0 million and $100.0 million as of December 31, 2025 and December 31, 2024, respectively. In February 2025, a private institution exercised its right to call on a repurchase agreement with a balance of $50.0 million, resulting in its termination. As of December 31, 2025, our remaining repurchase agreement was at a fixed interest rate of 3.89% with a remaining maturity of 3.9 years. Our repurchase agreement was accounted for as a collateralized financing arrangement (i.e., a secured borrowing) and not as a sale and subsequent repurchase of securities. Our remaining repurchase agreement with a private institution may be terminated at earlier specified dates by either the private institution or the Company. See Note 8 in Item 8. “Notes to Consolidated Statements” for more information.

Other Debt

Other debt was $558.2 million and $558.3 million as of December 31, 2025 and 2024, respectively. As of December 31, 2025, our available capacity under our line of credit with the FHLB was $2.1 billion. The FHLB borrowing capacity is secured by residential real estate loan collateral.

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Pension and Postretirement Plan Obligations

Retirement benefits payable was $20.1 million as of December 31, 2025, a decrease of $3.6 million from the prior year. Our pension and postretirement benefit obligations and net periodic benefit cost are actuarially determined based on a number of key assumptions, including the discount rate, the expected return on plan assets, and the health-care cost trend rate. The accounting for pension and postretirement benefit plans reflects the long-term nature of the obligations and the investment horizon of the plan assets.

The discount rate is used to determine the present value of future benefit obligations and the net periodic benefit cost. The discount rate used to value the present value of future benefit obligations as of each year-end is the rate used to estimate the net periodic benefit cost for the following year. Table 15 presents a sensitivity analysis of a 25-basis point change in discount rates to the pension and postretirement benefit plan’s net periodic benefit cost and benefit obligations:

See Note 13 in Item 8. “Notes to the Consolidated Financial Statements” for more information on our pension and postretirement benefit plans.

Contractual Obligations

The Company has various contractual obligations that affect its cash flows and liquidity. Our non-cancelable operating leases and finance lease obligations are primarily related to branch premises, equipment, and a portion of the Company’s headquarters’ building with lease terms extending through 2052. Purchase obligations arise from agreements to purchase goods or services that are enforceable and legally binding. Other contracts included in purchase obligations primarily consist of service agreements for various systems and applications supporting bank operations. Pension and postretirement benefit contributions represent the minimum expected contribution to the unfunded non-qualified pension plan and postretirement benefit plan. Actual contributions may differ from these estimates. Additional information regarding material contractual obligations is presented in Note 8, Note 13, Note 17, Note 19, and Note 22 in Item 8. “Notes to Consolidated Financial Statements.”

Foreign Activities

Cross-border outstandings are defined as loans (including accrued interest), acceptances, interest-bearing deposits with other banks, other interest-bearing investments, and any other monetary assets which are denominated in dollars or other non-local currency. As of December 31, 2025 and 2024, we did not have cross-border outstandings to any foreign country which exceeded 0.75% of our total assets.

Corporate Risk Profile

Managing risk is an essential part of successfully operating our business. Management believes that the most prominent risk exposures for the Company are credit risk, market risk, liquidity risk management, capital management, and operational risk.

Credit Risk

Credit risk is the risk that borrowers or counterparties will be unable or unwilling to repay their obligations in accordance with the underlying contractual terms. We manage and control credit risk in the loan and lease portfolio by adhering to

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well-defined underwriting criteria and account administration standards established by management. Written credit policies document underwriting standards, approval levels, exposure limits, and other guidelines deemed necessary and prudent. Portfolio exposures at the obligor, industry, product, and/or geographic location levels are actively monitored to manage concentration risk. Furthermore, credit risk management includes an independent credit review process that assesses compliance with commercial and consumer credit policies, risk ratings, and other critical credit information. In addition to utilizing risk management practices that are based upon established and sound lending practices, we adhere to Regulatory Safety and Soundness credit standards. This includes understanding and evaluating our customers’ borrowing needs and capacity to repay, in conjunction with specific risks in their line of business, economic factors, character and history.

Commercial and industrial loans are made primarily for the purpose of financing equipment acquisition, expansion, working capital, and other general business purposes. Lease financing primarily consists of sales-type leases to finance capital purchases ranging from computer equipment to equipment and vehicles. The credit decisions for these transactions are based upon an assessment of the overall financial capacity of the applicant. A determination is made as to the applicant’s ability to repay in accordance with the proposed terms as well as an overall assessment of the risks involved. In addition to an evaluation of the applicant’s financial condition, a determination is made of the probable adequacy of the primary and secondary sources of repayment, such as additional collateral or personal guarantees, to be relied upon in the transaction. Credit agency reports of the applicant’s credit history supplement the analysis of the applicant’s and/or guarantor’s creditworthiness.

Within our commercial and industrial loan portfolio are loans made to non-depository financial institutions (“NDFIs”). NDFIs encompass a wide range of financial entities that provide services similar to those of traditional banking institutions, but do not accept deposits from the general public and are not regulated by the federal banking agencies. As of December 31, 2025 and 2024, total loans to NDFIs were $80.8 million and $136.0 million, representing less than 1.0% of total loans and leases in both years.

Commercial mortgages and construction loans are offered to real estate investors, developers, builders, and owner-occupants primarily domiciled in Hawaiʻi. These loans are secured by first mortgages on real estate at loan-to-value (“LTV”) ratios deemed appropriate based on the property type, location, overall quality, and sponsorship. Generally, these LTV ratios do not exceed 75% based on regulatory-compliant appraisals that we obtain for the underlying properties. Commercial properties are well diversified among property types, with primary concentrations in multi-family, industrial, retail and lodging. Commercial mortgage and construction loans are substantially secured by properties located in Hawaiʻi.

Commercial mortgage loans are underwritten based on the economic fundamentals of the property and the creditworthiness of the borrower. In evaluating a proposed commercial mortgage loan, we primarily emphasize the ratio of the property’s projected net cash flows to the loan’s debt servicing requirement. The debt service coverage ratio normally is not less than 125% and it is computed after deducting for a vacancy factor and property expenses as appropriate. In addition, a personal guarantee of the loan or a portion thereof is sometimes required from the principal(s) of the borrower. We typically require title insurance insuring the priority of our lien, fire, and extended coverage casualty insurance, and flood insurance, if appropriate, in order to protect our security interest in the underlying property. In addition, business interruption insurance or other insurance may be required. Owner-occupant commercial mortgage loans are underwritten based upon the cash flow of the business provided that the real estate asset is utilized in the operation of the business. Real estate is evaluated independently as a secondary source of repayment.

Construction loans are underwritten against projected cash flows derived from rental income, business income from an owner-occupant, or the sale of the property to an end-user. We may mitigate the risks associated with these types of loans by requiring fixed-price construction contracts, performance and payment bonding, controlled disbursements, and pre-sale contracts or pre-lease agreements.

We offer a variety of first lien and second lien mortgage loans to consumers within our markets with first lien residential mortgages comprising our largest loan category. Residential mortgage loans are secured by a primary residence, or a secondary residence or investor property and are underwritten to assess the credit risks and financial capacity and repayment ability of the applicant. Decisions are primarily based on LTV ratios, debt-to-income (“DTI”) ratios or debt-service coverage ratios (“DSCR”), liquidity, and credit scores. LTV ratios generally do not exceed 80%, although higher levels are permitted with mortgage insurance. We offer variable rate mortgage loans with interest rates that are subject to change every six months after the third, fifth, seventh, or tenth year, depending on the product and are based on the Secured Overnight Financing Rate (“SOFR”). Variable rate mortgage loans are underwritten at fully indexed interest rates. We do not offer payment-option facilities, sub-prime or Alt-A loans, or any product with negative amortization. We selectively offer interest-only mortgage loans to private banking clients.

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Home equity lines and loans are secured primarily by a first lien mortgage, or a second lien mortgage on a primary residence, secondary residence, or investor property. The underwriting terms for the home equity product generally permits borrowing availability, in the aggregate, up to 80% of the value of the collateral property for primary residence and up to 75% of the value of the collateral property for secondary residence or investor at the time of origination. We offer fixed and variable rate home equity loans, with variable rate loans underwritten at fully indexed interest rates. Our procedures for underwriting home equity loans include an assessment of an applicant’s overall financial capacity and repayment ability. Decisions are primarily based on LTV ratios, DTI ratios or DSCR, liquidity and credit scores. Maximum line and loan amounts and LTVs are determined by collateral value and customer segment.

Automobile lending activities include loans and leases secured by new or used automobiles, and leases secured by new automobiles. We originate automobile loans on an indirect basis through selected dealerships in Hawaiʻi, Guam and Saipan, and we originate automobile leases on an indirect basis through selected dealerships in Hawaiʻi. Our procedures for underwriting automobile loans and leases include an assessment of an applicant’s overall financial capacity and repayment ability. Although an applicant’s creditworthiness is the primary consideration, the underwriting process also includes a comparison of the value of the automobile collateral to the proposed loan amount. We require borrowers to maintain full coverage automobile insurance on automobile loans and leases, with the Bank listed as either the loss payee or additional insured.

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Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More

Table 16 presents a five-year history of non-performing assets and accruing loans and leases past due 90 days or more.

Table 17 presents the activity in Non-Performing Assets (“NPAs”) for 2025:

1.Excludes loans that are fully charged off and placed on non-accrual status during the same period.

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NPAs consist of non-accrual loans and leases and foreclosed real estate. Changes in the level of non-accrual loans and leases typically are caused by loans and leases that reach a specified past due status, offset by reductions for loans and leases that are charged-off, paid down, sold, transferred to foreclosed real estate, or are no longer classified as non-accrual because they have returned to accrual status.

Non-accrual loans and leases as of December 31, 2025 were $13.9 million, a decrease of $2.8 million or 17% from prior year. As of December 31, 2025, our residential mortgage non-accrual loans of $5.4 million were comprised of 18 loans with a weighted average current loan-to-value ratio of 69%. As of December 31, 2025, our home equity non-accrual loans of $4.5 million were comprised of 55 loans with a weighted average current loan-to-value ratio of 52%.

Foreclosed real estate represents property acquired as the result of borrower defaults on loans. Foreclosed real estate is recorded at fair value, less estimated selling costs, at the time of foreclosure. On an ongoing basis, properties are appraised as required by market conditions and applicable regulations. Foreclosed real estate was $0.3 million as of December 31, 2025 compared to $2.7 million as of December 31, 2024.

If interest due on the balances of all non-accrual loans as of December 31, 2025 had been accrued under the original terms, approximately $1.0 million in additional total interest income would have been recognized in 2025.

Loans and Leases Past Due 90 Days or More and Still Accruing Interest

Loans and leases past due 90 days or more and still accruing interest were $12.3 million as of December 31, 2025, a $4.0 million or 48% increase from prior year. The increase was primarily in our residential mortgage portfolio. This category includes loans and leases that are well-secured and in the process of collection, as well as loans and leases that have not reached the specified past due status to be placed on non-accrual.

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Reserve for Credit Losses

The reserve for credit losses consists of the Allowance and the Unfunded Reserve. Table 18 presents the activity in the Company’s reserve for credit losses for the years ended December 31:

1.Certain prior period information has been reclassified to conform to current presentations.

2.On December 31, 2020, the Company established a reserve on accrued interest receivable related to loans in which interest payment forbearances were granted. The reserve was recorded as a contra-asset against accrued interest receivable with the offset to provision for credit losses. In 2022, the reserve on accrued interest receivable was fully released.

3.The reserve for unfunded commitments is separately recorded in other liabilities in the consolidated statements of condition. The offsetting provision was recorded in provision for credit losses in the consolidated statements of income.

4.The numerator comprises the Allowance for Credit Losses - Loans and Leases.

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Allowance for Credit Losses

Table 19 and 20 presents the allocation of the Allowance by loan and lease category.